
Copyright^- 

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AMERICAN METHODS 

IN 

FOREIGN TRADE 



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Vfe Qraw-3f ill Book (xx lie 

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| 

5 
1 



AMERICAN METHODS 

IN 

FOREIGN TRADE 

A Guide to Export Selling' Policy 



BY 

GEORGE C. VEDDER 



First Edition 



McGRAW-HILL BOOK COMPANY, Inc. 
239 WEST 39th STREET. NEW YORK 



LONDON: HILL PUBLISHING CO., Ltd. 
6 & 8 BOUVERIE ST.. E. C. 

1919 






Copyright 1919, by the 
McGRAW-HILL BOOK COMPANY, Inc. 



JAN 14 i£ 

Jv@CI.A5 LI 30 8 

1U.|. 









TO THE 

AMERICAN BUSINESS EXECUTIVE 

TRUE TO HIS HERITAGE OF IDEALISM 

CONFIDENT OF THE EVENTUAL TRIUMPH 

OF CORRECT PRINCIPLES 

ENTHUSIASTIC, HARD-WORKING AND FAIR-PLAYING 

THIS BOOK IS DEDICATED 



PEEFACE 



American manufacturers are not the best export- 
ers in the world, but the best exporters in the world 
are American manufacturers. In the United States 
are to be found the most efficient world traders in 
steel, heavy machinery, office specialties, typewrit- 
ers, cash registers, talking machines, automobiles, 
shoes, hosiery, hardware, cameras and scores of 
other articles. Some of them have not as yet the 
largest overseas trade in their line, but their skill 
will eventually make them leaders in this respect 
also. 

Volume of sales, however, is not an all-important 
consideration for it takes care of itself in due time 
if methods are sound and constructive and possess 
continuity. The statement that the United States 
has the best exporters of scores of lines means that 
we have the men who have shown preeminent ability 
in building up a profitable foreign demand for these 
goods, on the solid foundation of that due regard 
for the rights and welfare of the distributor and con- 
sumer from which springs good will, the only real 
guarantee of future profit and growth. 

Our weakness in the foreign trade field is there- 
fore not that we do not know how to export, but 
rather that, as yet, good American exporters are 

vii 



viii PREFACE 

relatively few in number. The great majority of 
our manufacturers have not learned how the con- 
spicuous successes of their compatriots have been 
achieved. When they really want to find this out, 
they will. The following pages present facts gath- 
ered and ideas developed, not by research, but by 
years of constant association with successful export- 
ing manufacturers, foreign sales managers, general 
exporters and overseas buyers. May they serve as 
a guide to a sound export selling policy, adapted to 
each investigator 's line and in harmony with Ameri- 
can ideas of merchandizing. 

If any of the ideas presented in these pages seem 
to the reader to deserve amplification or amendment 
the author hopes to receive constructive sugges- 
tions quoting the exact passage. The conceptions 
set forth in this volume are not the precepts of 
a theorist but the discoveries and deductions of a 
practical man who is an earnest seeker of the truth 
and who believes he has collected enough of it to 
make it worth while to pass it on to all in printed 
form. 

The reality of the existence of distinctively 
American methods of building up a foreign trade 
may come as a surprise to many of our manufac- 
turers, into whose ears has for two decades been 
pouring a crescendo stream of adverse criticism of 
their handling of export business. In fact it may 
be doubted whether our successful exporters them- 
selves fully realize how their selling activities differ 
from those of European manufacturers. They have 
not, as so repeatedly recommended, imitated the 
English, French and German traders, but when 



PREFACE k 

really earnestly seeking foreign business have 
rather disregarded them, studied their markets for 
themselves and solved the problems there presented, 
by the application of the principles of good business 
as they know them, adapting them to existing con- 
ditions everywhere. 

If at times it seems to the reader that the note 
of idealism is too strongly sounded, may he at- 
tribute this to a profound conviction that our suc- 
cess in foreign trade is largely dependent on the 
practical application by our manufacturers of the 
Golden Eule in their dealings with buyers in over- 
seas markets. Those who have become leaders in 
this field have, either deliberately or unconsciously, 
practised it. This book could render no greater 
national service than to discourage the export 
activities of survivors of the era of Caveat Emptor. 

So enamored with German methods are our su- 
perficial observers of world trade and so dazzled 
and intimidated by their seeming effectiveness are 
our tariff protected manufacturers and political 
cheap-competition alarmists, that it seems advisable 
to devote first attention to them, later drawing some 
conclusions as to future rivalry to be expected from 
this quarter. American foreign trade policies, as 
will be made clear, differ in principle from the Teu- 
tonic, though sometimes appearing to resemble them 
in surface details. In order to avoid being misled, 
it is, therefore, important to get the fundamental 
weaknesses of the German exporter firmly fixed in 
mind. 



CONTENTS 



PAGE 

Preface . ' . • v 

CHAPTER 

I. The Fundamental Weaknesses op German Trade 

Policy 1 

II. Why a Nationalized Foreign Trade? . . . .10*^ 

III. The Webb-Pomerene Act and Combinations in For- 

eign Trade 16 

IV. The Export Commission House 22 

V. The Export Selling Agent 27 

VI. The Export Manager and the Exporting Manufac- 
turer 32 

VII. The Export Department 40 

VIII. The Export Selling Plan 44 

IX. Selling through Exclusive Agents . . . . 48 -" 
X. General Merchandizing in Foreign Markets . .52 

XI. Determination of Export Prices 56 

XII. Making a Start in Direct Exporting . . . . 60 ~ 

XIII. Circularizing by the Beginner in Direct Exporting 65 

XIV. Export Publications and the Beginner in Direct 

Exporting 70 

XV. The Export Catalog 75 

XVI. American Salesmen in Foreign Trade .... 80 

XVII. Cooperating with Foreign Agents and Dealers . 89 

XVIII. General Publication Publicity in Foreign Markets 95 

* XIX. Foreign Credits 101 

XX. International Crooks 108 

XXI. Handling Foreign Correspondence . . . .113 
XXII. Heavy Machinery in Foreign Markets . . .119 

XXIII. The Exportation of Raw, Staple, and Standard- 

ized Products 124 

XXIV. A Plea for Constructive Criticism .... 128 
XXV. The "Made in Germany" Idea 133 

XXVI. A Suggestion to the Department of Commerce . 147 

xi 



xii CONTENTS 

CHAPTEH PAGE 

XXVII. American Banks Abroad 151 

XXVIII. Foreign Investments and Export Trade . . . 156 

XXIX. The American Merchant Marine .... 162 

XXX. Reciprocity Treaties and Preferential Tariffs . 169 

XXXI. America's Preeminence in Salesmanship . . . 173 

XXXII. The Protective Tariff and Foreign Trade . . 179 

XXXIII. German Competition 187 

L'Envoi 196 

Index . 199 



AMERICAN METHODS 
IN FOREIGN TRADE 



CHAPTER I 

THE FUNDAMENTAL WEAKNESSES OF 
GERMAN TRADE POLICY 

Gekman business principles and methods were as 
much the offspring of autocracy as were the govern- 
mental policies of that country. Just as the naval 
and military establishments of the Kaiser disre- 
garded all laws of civilization and humanity in the 
prosecution of their war aims, so German industry, 
supervised and directed, not by independent individ- 
uals whose survival depended on their fitness to 
serve society, but by imperial authority whose favor 
or disfavor decided to a large extent the average 
citizen's future, broke most of the basic laws of good 
business and fair competition as we understand 
them. 

German commercial frightfulness preceded the 
revelation of its military counterpart and its aim 
was the development of manufacturing, not to serve 
society with the products thereof or promote the 
welfare of producers, distributors and users of 
them, but rather to build up the industrial machine 



2 AMERICAN METHODS IN FOREIGN TRADE 

necessary to autocracy's aims of world conquest. 
Can any thinking man believe otherwise in view of 
the German Government's unhesitating course in 
July, 1914? Would any ruler or ruling class, how- 
ever autocratic, have so deliberately dedicated a 
great industrial structure to the needs of world war, 
hopelessly involving the economic future of its every 
citizen, had it not been so planned from the be- 
ginning? Germany was in the position of the 
burglar who, having mortgaged his all to equip him- 
self, sets out to rob a bank in the hope of recovering 
his investment with as much more as he can get. 

Most historians agree that our Civil War, which 
was fought with slavery as the immediate popular 
issue, was in reality caused by the economic, social 
and political divergence of the North and South. It 
is now believed that years before the great struggle, 
slavery was a doomed institution that had always 
carried within itself the germ of its own destruction, 
social injustice. The South fought against the North 
as the unrecognized embodiment of the inevitable. 

The writer ventures the prediction that historians 
will demonstrate that the great World War was 
precipitated by the German Government's realiza- 
tion that the inevitable decline of a world trade, 
deliberately built up to serve abnormal and selfish 
aims, was impending or had already begun. It may 
be that the minds of those who ordered this terrible 
thing did not fully comprehend what was urging 
them on. Perhaps the impulse was born of a sub- 
conscious impression of approaching disaster. 
However this may be, the fact seems very clear 
that, just as Germany at war found herself forced 



WEAKNESSES OF GERMAN TRADE POLICY 3 

to feed her human chattels on victory after victory, 
conquest after conquest, to ward off internal 
trouble, so she was, in the first place, driven to war 
itself, to save autocracy from the political effect of 
the threatened revelation of the weakness of an 
enormous commercial structure built on the insecure 
sands of bad business principles and unsound 
methods and strained in every part by the constant 
pressure of enlightened competition. German com- 
merce, like slavery, carried within itself the germ 
of its own destruction. 

And why was German trade facing an uncertain 
future in 1914! 

It seems strange that men who, calmly and with 
full assurance as to the outcome, await the down- 
fall of a rival who, by unbusinesslike methods, takes 
away some of their trade, should not have realized 
ihat the German system was not only doomed to 
eventual failure, but was at all times extremely 
vulnerable to intelligent competition. Later on it 
will be shown that this vulnerability provided our 
pioneer exporters with some of their greatest op- 
portunities, but at this point let us confine our- 
selves to the consideration of the inherent unsound- 
ness of Teutonic methods. 

The much-praised German banks in all parts of 
the world had served primarily, not their depositors 
and borrowers,. not the business needs of the coun- 
tries in which they were located, but chiefly those 
of Germany and her manufacturers and exporters. 
This certainly constitutes unsoundness, if there is 
anything in the service theory of banking. Credits 
were extended or withheld, not as demanded by the 

J 



4 AMERICAN METHODS IN FOREIGN TRADE 

fbest interests of local importers and distributors, 
but as such action might benefit those who planned 
to force their products on the community by mak- 
ing it difficult or impossible to obtain others. 

Many American manufacturers can testify to the 
malign influence of these banks on the progress of 
various countries. How many prospective buyers 
of English, French and American goods were 
switched to those made in Germany, chiefly or solely 
by the threatened withholding of necessary and en- 
tirely warranted credits, no one can estimate, but 
examples are sufficiently numerous to prove the 
prevalence of the practice. To be sure, the crafty 
bank manager was not so foolish as to fail to recog- 
nize that he could not in some cases go too far and 
there are instances where, after all possible ob- 
structive tactics had been employed and the position 
of the credit seeker was sufficiently independent to 
make it probable that he could get what he wanted 
elsewhere, the bank submitted to the inevitable and 
took the best profit obtainable. This never hap- 
pened, however, so long as there remained a pos- 
sibility of diverting the business to a German house. 
German banks repeatedly violated the confiden- 
tial nature of their relations with foreign importing 
firms. The correspondence files of American manu- 
facturers are full of complaints from customers 
which show conclusively that selling representatives 
< of German houses were immediately provided with 
full information regarding all transactions between 
foreign firms and competing sources of supply, the 
details of which came to the attention of German 
banks through the handling of documentary drafts, 



WEAKNESSES OF GERMAN TRADE POLICY 5 

the discussion of prospective credits or other 
negotiations usually regarded by honorable busi- 
ness men as confidential. 

"Made in Germany'' speedily came to be a label 
of inferiority for the good and sufficient reason that 
one of the chief selling points of the exporters of 
that country was cheapness. When the seller 
educates his customers to look upon price as a first 
consideration he subordinates quality, subjects him- 
self to the severe competition of inferior and 
cheaper goods and must himself lower the quality 
of his product when he reaches the point where 
improvement of facilities and increase of output can 
no longer effect the economies to warrant further 
price reductions. Only the maker of quality goods 
whose chief selling argument is service to the user, 
is immune to the evils of cheap competition and his 
immunity is universal. In but a few lines, such as 
cutlery and dyestuffs, were German manufacturers 
preeminent as makers of quality products. 

American manufacturers were repeatedly ex- 
horted to imitate the Germans who it was said would 
go to any extreme to supply what was wanted. 
Could any policy be more shortsighted? Consider 
the manufacturer whose success has been made by 
educating domestic distributors and users to the 
desirability of an article which he believes to be 
superior to any similar product. Is he to keep out 
of foreign markets, make the inferior article to 
which they are accustomed or repeat abroad what 
he has done at home? 

Adapting a product to a market is ridiculously 
reactionary unless rendered absolutely necessary by 



6 AMERICAN METHODS IN FOREIGN TRADE 

practical considerations of climate, law, taste or 
other conditions beyond the control of the manu- 
facturer, distributor or user. Conforming to the 
whim of those who insist on having a certain thing 
because they have always had it may result in larger 
immediate sales, but it is not constructive. 

The German credit system was a source of great 
weakness for two reasons. The terms accorded to 
foreign buyers were based on bad business prin- 
ciples. The real function of mercantile credit is not 
financial assistance to individual recipients. Its ex- 
tension is a manifestation of that confidence in the 
business integrity of business men without which 
world commerce would come to a standstill. One 
of its purposes is service, eliminating as it does 
the intolerable inconvenience incident to the pay- 
ment of cash in advance or on delivery. Its greatest 
benefit is the multiplication of the economic useful- 
ness of capital, making it possible for the whole 
civilized world to transact a greatly increased 
volume of business on its accumulated wealth. 

When the credit function is degraded by its em- 
ployment as a competitive weapon we take all the 
chances incident to price cutting and wildcat bank- 
ing. Germany encouraged and supported her busi- 
ness men in running these risks, not in order to lay 
a strong foundation for future trade, but to build 
up as rapidly as possible the needed industrial prop 
of her militarism and imperialism. The effect was 
to develop an enormous artificially inflated com- 
merce with the incidental demoralization of world 
markets and the enslavement of many distributors 
of manufactured goods throughout the world. 



WEAKNESSES OF GERMAN TRADE POLICY 7 

For the extension of long credits, unwarranted 
by anything but the German greed for trade, usually 
did one or both of two things to the recipient. He 
either became over-extended and got into difficulties 
or forfeited his independence by owing more than 
he could pay, often becoming as a result little more 
than the paid manager of what was formerly his 
own business. 

The manufacturer has a double duty. He is at 
once the custodian of the welfare of his employees 
and that of his distributors and consumers. The 
German manufacturer looked after only the first of 
these obligations. He took care of his co-workers 
because they were necessary to his country's aims, 
but that enlightened selfishness which recognizes 
distributors as co-partners and satisfied customers 
as the greatest of business assets, was never one 
of his characteristics. 

German exporters followed a wide range of de- 
ceptive practices. Among these may be mentioned 
briefly the placing of German name plates on 
machinery made elsewhere, the use of brands be- 
longing to non-Teutonic firms on inferior German 
goods and carefully calculated misrepresentations 
regarding specific products of competing nations. 

It is impossible for anyone to prove at this time 
that the foregoing and less known and less im- 
portant weaknesses of the German trade policy, 
destined it to ultimate disaster, but there were many 
evidences during the period of 1910-1914 that Ger- 
many, having sown the wind, was to reap the whirl- 
wind. Certainly no good economist or business man 
will claim that trade practices which are recognized 



8 AMERICAN METHODS IN FOREIGN TRADE 

as unsound when employed by individuals, become 
sound and desirable because they are advocated and 
supported by an exceptionally able and powerful 
but entirely selfish autocracy. 

If German bankers, manufacturers and exporters 
had not had the backing of the Imperial Govern- 
ment, the failure of their methods would have come 
quickly. To those who believe in the eventual 
triumph of correct principles it is clear that ultimate 
failure was certain. 

Not to recognize that any business success, built 
on a bad foundation, is at best but temporary, how- 
ever prolonged it may be by the support of the tax- 
ing power of a great country, is to contend that 
wrong, strongly backed up, becomes right. To be- 
lieve in the ultimate triumph of German frightful- 
ness, commercial or military, is to ignore the resist- 
less strength of the normal reactions of human 
nature. 

It is not contended that the things that Germany 
did were wrong in themselves. The establishment 
of foreign banks and steamship lines, the accumula- 
tion of information on which to base credit and 
guide trade seekers — all these things were admirably 
adapted to serve the legitimate aims of industrial 
leaders and properly used, would have benefited 
not only German society, but the whole civilized 
world. That the commercial power incident to the 
control of these great facilities was used for entirely 
selfish objects, meant ultimate disaster just as cer- 
tainly as autocracy's misuse of its political power 
led eventually to its own destruction. 

German trade methods were autocratic and selfish. 



WEAKNESSES OF GERMAN TRADE POLICY 9 

The American manufacturer's democratic spirit of 
co-operation with the distributor in serving the con- 
sumer for the good of all concerned, has laid a firm 
foundation for a great trade in every market and 
is destined to pervade the whole civilized world. 



CHAPTEE II 
WHY A NATIONALIZED FOREIGN TRADE? 

Theee is no stronger evidence of the insidious 
character of the influence of German ideas than the 
tendency, not only of our foreign trade pamphlet- 
eers and other academic exporters, but also of our 
so-called big business men, to look upon the nation- 
alizing of foreign trade as desirable. Because 
Germany, by the establishment of central agencies 
combined that country's commercial and industrial 
institutions and facilities into a glorified govern- 
mental trust, which, by steam-roller methods and 
others even less creditable, seemed able to attain 
whatever aim its creators desired, we are constantly 
being told that combination and nationalization of 
the efforts of our manufacturers is essential to the 
best results in foreign trade. * ' Nothing succeeds like 
success' ' in carrying conviction, but too often tem- 
porary success based on bad business principles is 
sadly misleading. 

That a general tendency can be wrong is capable 
of much exemplification. No more conspicuous casG 
exists than that of Henry Ford. If he had followed 
the general trend of the first ten years in his field 
of industry instead of adhering persistently to good 
business principles as he knew them, while he might 
not have failed as so many did, he certainly would 

10 



WHY A NATIONALIZED FOREIGN TRADE? 11 

never have been the industrial leader that he now 
is. It is critically important today that our manu- 
facturers have the courage to refuse to imitate 
others and adhere to American methods. 

The nationalization of trade, foreign or domestic, 
is contrary to the dictates of common sense. The 
commerce of the United States as a whole has been 
developed by the producing and selling genius of 
the American business executive and rests upon the 
secure foundation of the aggregate good will — the 
reputation for quality of product, service and fair 
dealing — built up by all producing and selling firms. 
The success of every American manufacturer at 
home or abroad rests on the recognition of this 
fundamental fact. Why should we, in our hour of 
greatest opportunity for service and profit, depart 
from tried and proven principles! 

Our Government can, to be sure, accomplish much 
by diplomatic means to create a favorable at- 
mosphere and can also, by the dissemination of gen- 
eral as well as specific information, show our manu- 
facturers Avhere their opportunities lie, thus greatly 
assisting the individual in his foreign trade efforts. 
Equally certain is it that the establishment of 
foreign banks and international steamship lines 
should be encouraged. When, however, the Govern- 
ment is urged to constitute itself an agency for do- 
ing for the manufacturer the things that he not only 
ought to, but must do for himself, or the manu- 
facturer is led to believe that, until Washington gets 
back of the pet projects of advocates of the nation- 
alization of foreign trade, it is useless for him to 
attempt to accomplish very much, the tendency will 



12 AMERICAN METHODS IN FOREIGN TRADE 

be toward a lessening of individual effort resulting 
in a great loss of prospective trade. 

The time will never come when the foreign dis- 
tributor or consumer will to any appreciable extent 
buy American, German or English products because 
they are such. The first consideration with the user 
is the quality and service of the article purchased. 
The distributor is influenced, not only by the same 
desirable characteristics, but also by the expecta- 
tion of consequent continuity and increase of profit 
for those who handle the article. A national reputa- 
tion for inventive genius and quality of manufac- 
tured products and the existence of adequate bank- 
ing and shipping facilities are helpful, but the first 
thought of the foreign importing and distributing 
house is the standing of each firm that constitutes a 
source of supply for needed lines of goods, regard- 
less of its nationality. 

The truth of this is recognized by all successful 
American export managers, for it is they who, years 
ago, in spite of the supposedly fatal handicap of 
low-price, long-credit competition, the lack of an 
American merchant marine and international bank- 
ing facilities and the great difficulty of obtaining 
the information on which to base a practical selling 
campaign having for its aim the upbuilding of a 
distributing organization, went boldly into foreign 
markets, in person or by the written and printed 
word, met price objections with quality and service 
arguments, expressed their willingness to extend 
reasonable credits while arguing against unwar- 
ranted extensions as bad for all concerned, showed 
how, if their goods were imported in sufficient quan- 



WHY A NATIONALIZED FOREIGN TRADE? 13 

tities, existing banks and steamship lines would do 
their part, for the profit involved if for no other 
reason, and in general stood by their guns. 

They found some advance interest in American 
goods, partly because of the national reputation for 
doing things well and partly because many firms 
were dissatisfied with the quality of European lines 
or saw an opportunity of securing their business 
independence by taking some of their eggs out of 
the capacious and greedy German basket. Once con- 
vinced by the only arguments the American manu- 
facturer had, valuable connections were made and 
so satisfactory were the goods supplied and the 
service given, that before the outbreak of the Great 
War, the importations of American manufactured 
goods in Latin America were second only to those 
of English origin and rapid gains were being made 
all over the world. 

In nearly fourteen years of intimate acquaintance 
with scores of American foreign salesmen and sales 
managers, the writer has yet to learn of a genuine 
instance of failure to get a foothold in a foreign 
market, due to price competition, the long-credit 
bugbear or the lack of shipping or banking facilities. 
Nor can one find among our successful export men 
any feeling regarding German exporters but calm 
self-confidence oftentimes tinged with the contempt 
for their methods that is invariably born of intimate 
familiarity with them. 

Again it should be stated that no argument 
against an American merchant marine, foreign 
banks or other desirable facilities, is here intended. 
The contention is that all these tilings are at the 



14 AMERICAN METHODS IN FOREIGN TRADE 

best but important tools of the exporter. The better 
the tools, the better the work done, bnt the essential 
things are willingness on the part of the individual 
to do the work and the ability to do it right, if given 
the tools. 

During the time that our pioneer exporters were 
laying the foundation of their great successes, the 
public heard little of them, but did hear a great deal 
about those foreign-competition-fearing manufac- 
turers, who, timidly entering the world-trade field 
entirely unequipped to grapple with its problems and 
not sufficiently interested to find out how to meet 
them, provided our lame-duck consuls and returning 
tourists of that era with material for their endlessly 
repeated lectures. We have heard altogether too 
much about American failures in export. It is high 
time that we studied the successes, for only by the 
general inculcation of the principles and methods on 
which they are based, can we ever attain our destiny 
in the field of international commercial exchange. 

Admirers of German trade methods are either 
dazzled by their spectacular but temporary results 
into disregard of the basic principles of good 
business or are at heart undemocratic, believing that 
the mass of mankind do not know what is good 
for them and that the chosen few should rule, not 
only politically, but commercially. If democracy is 
to be the political creed of the future, if government 
can only derive its just powers from the consent of 
the governed, then the industry of the future must 
also be regulated, not to serve only the ends of 
those who control it, but the welfare of those who 
participate in it, either as workers or consumers. 



WHY A NATIONALIZED FOREIGN TRADE? 15 

And time will show the consumer masses at home and 
abroad to be the more important factor because the 
more numerous. The day is not far off when it will 
be clearly seen that to manage an industry for the 
welfare of its workers alone is just as wrong in 
principle as to consider only the interests of the 
few who, because of fortunate inheritance or special 
ability, control its policies. On the general recog- 
nition and the active and intelligent practice of this 
principle depends America's future in world trade. 



CHAPTEE in 

THE WEBB-POMEBENE ACT AND COMBINA- 
TIONS IN FOEEIGN TEADE 

The fact that, while we combated political Ger- 
many, her intellectual invasion of this country con- 
tinued, was evidenced by the passage of the Webb- 
Pomerene Act. Without going into any detailed 
analysis of this measure, it may be described as 
purporting, by the nullification of the Sherman Law 
so far as export trade is concerned, to enable manu- 
facturers to combine legally to secure for themselves 
the so-called advantages of the German cartel 
system. 

The cartel system is essentially a legalized com- 
bination in restraint of trade. It is in line with the 
German idea of achievement by mass attack rather 
than by individual consideration for the greatest 
good of the greatest number of those who build up 
or support a government, industry or other human 
institution. The constituent members of a cartel 
are presumptively able, by price-fixing and other 
devices familiar to the American public, to conduct 
a ruthless campaign against competitors and turn 
the power thus built up against consumers. 

Characterizations of the Webb-Pomerene Act by 
export managers range all the way from denuncia- 

16 



THE WEBB-POMERENE ACT 17 

tion as a flank attack on the principles embodied in 
the Sherman Law by those who are interested in 
its moral nullification or legal repeal, to expression 
of the opinion that it may be of benefit to some 
manufacturers. It is a striking fact that few if any 
foreign sales managers, who have built up a good 
business, consider it of any value in their particular 
line. 

It must be admitted that no one who believes in 
the principles underlying our anti-trust legislation, 
and at the same time looks upon all people every- 
where as entitled to justice, could honestly advocate 
a measure like the Webb-Pomerene Act, and that 
even those who do not approve of the Sherman Law, 
still had no right to induce the Government to put 
itself, particularly at a critical period in our inter- 
national relations, in the inconsistent position of 
permitting our manufacturers to do to the foreign 
consumer who has no vote in our affairs, what can- 
not be done to the people of the United States, whose 
constitutional rights enable them effectively to ex- 
press their approval or displeasure. 

This serious violation of good principle has had 
no uncertain effect in foreign markets. A mass of 
adverse comment has accumulated in the corre- 
spondence files of our exporters and the anti- Ameri- 
can press everywhere has welcomed this apparent 
proof of the selfish character of our national aims. 
That portion of our press that advocated this 
measure has been kept busy explaining that their 
overseas contemporaries misunderstand its pur- 
port, pointing out that certain provisions prevent 
any violations of the spirit of the Sherman Law. 



18 AMERICAN METHODS IN FOREIGN TRADE 

This has been very unconvincing in view of the fact 
that we have kept the Sherman Law in force at 
home. That our alert European competitors would 
fail to use this situation to their advantage was 
scarcely to have been expected. 

The existence of cartels in Germany offered no 
moral justification of the Webb-Pomerene Act. 
That country was not highly regarded as a moral 
mentor and the system was not, as a matter of fact, 
exclusively a foreign trade device. The cartels 
operated in the home market as well as abroad. 
Our Government should have had the courage either 
to repeal the Sherman Law altogether or refuse to 
sanction any departure from its principles. Wrong 
does not become right beyond our frontiers. 

That one of these measures must eventually be 
either repealed or ignored, seems so evident as not 
to need exposition. Counsel for a large combina- 
tion, in an argument before the Supreme Court, 
referred to the Webb-Pomerene Act soon after its 
passage as justifying in principle the acts for which 
the Government was prosecuting his client under 
the provisions of the Sherman Law. That two 
measures so contradictory morally can long remain 
on the books and be effective, is incredible. 

Whatever the real intent of the sponsors of the 
Webb-Pomerene Act, the hope that it would be help- 
ful to small competing manufacturers seems to have 
been doomed to disappointment except, possibly, in 
the case of producers of raw, staple or standardized 
products, which, possessing little or no individuality, 
must, to some extent, meet price competition. Such 
lines, however, owing to constantly increasing home 



THE WEBB-POMERENE ACT 19 

consumption, have constituted a steadily lessening 
percentage of our total exports. 

As previously pointed out, our future in the field 
of foreign trade depends not on our ability to meet 
price competition, but to sell quality goods for a 
fair price by the scientific upbuilding of distribution 
and enlightened regard for the welfare of all con- 
cerned. To believe that a number of small manu- 
facturers of such goods, continuing to compete at 
home, can harmonize their varying standards to 
combine under the provisions of the Webb-Pomerene 
Act and secure such a trade, is a severe strain on 
the credulity of the experienced business man. The 
best they can hope to accomplish is to reduce selling 
expense (no initial reductions in production costs 
are possible), and for the sake of increased output, 
lower their prices to a point where the combination 
may get some business on the German low-price 
basis. Such a trade, however, would sooner or later 
be limited or wiped out by the advance of the en- 
lightened competition of quality goods. . 

The Webb-Pomerene Act was at the worst 
estimate a deliberate departure from principle with 
ulterior motives. At its best it was a misguided 
attempt to benefit our manufacturers which will fail 
because it was based on the misconception that suc- 
cess in foreign selling depends on meeting price 
competition and ignored the real trend of modern 
world trade. 

Export combinations of manufacturers of non- 
competing but allied lines have long existed. Some 
of these have been deliberate and intentional crea- 
tions and others gradual developments. Occasion- 



20 AMERICAN METHODS IN FOREIGN TRADE 

ally, an exporting manuf acturer, in his endeavor to 
co-operate with foreign customers, has made pur- 
chases of other lines for which such clients had no 
regular sources of supply. This led to securing the 
export sales representation for many of such 
products and sometimes to the transfer of all over- 
seas selling operations to a separate company 
specially formed for the purpose. 

Export combinations gradually evolved in this 
way are much more likely to be satisfactory than 
are those that spring full-fledged from the activities 
of a promoter. There are some instances where 
success has attended the efforts of several non- 
competing manufacturers who combined to form an 
export company and took it upon themselves 
as controlling stockholders and directors, to oversee 
the development of a pre-determined business policy. 

It is, however, probable that most of the success- 
ful combinations of non-competing manufacturers 
are those that center around the activities of export 
selling agents as described in Chapter V. Every sell- 
ing agent as he progresses is inclined to take on 
lines allied to those he already represents with the 
result that in due course he constitutes a bond be- 
tween the makers of each product he sells, they, ex- 
cept through him, having no relations with each 
other. Each firm, having its own satisfactory ar- 
rangement with him and concerning itself not at all 
with the separate agreements between him and the 
makers of other lines, continues to look upon him 
as its export manager as long as the volume of trade 
is satisfactory, quite regardless of what he is doing 
for others. Such loosely held combinations have a 



THE WEBB-POMERENE ACT 21 

flexibility that the formally organized export com- 
panies lack and they may be built up gradually, as 
opportunities to take on new lines present them- 
selves, without the necessity of undue risk to anyone 
concerned. 



CHAPTEE IV 
THE EXPORT COMMISSION HOUSE 

The first step usually taken by an American 
manufacturer who contemplates a foreign selling 
campaign is to interview several of the so-called 
export commission houses. Almost every estab- 
lished and reputable producer receives from such 
firms occasional unsolicited orders and it is but 
natural that, when attempting to build up a foreign 
demand for any product, the maker should follow the 
lines of least resistance and confer with the ap- 
parent sources of such overseas orders as have 
previously been filled. 

The many-sided and varying institutions to which 
the term " Export Commission House" is popularly 
applied, represent facilities of great potential value 
to the novice in foreign trade, but sometimes they 
also, wittingly or unwittingly, constitute obstacles 
or pitfalls in his path if he does not understand the 
character of the functions they perform. It is there- 
fore essential that the export pilgrim, looking for 
the path which leads to his foreign trade paradise, 
gain the fullest possible knowledge of them and' their 
possibilities for good and evil. 

The development of manufacturing in the United 
States during the latter half of the Nineteenth Cen- 
tury, marvelous as it was, ran but a neck-and-neck 

22 



THE EXPORT COMMISSION HOUSE 23 

race with domestic demand. A surplus that could 
be exported was at times produced in many lines, 
but there were few individual cases in which such 
production was sufficiently continuous to justify a 
determined effort on the part of the maker to get 
into foreign markets. Those who, by chance or 
otherwise, made good overseas connections often 
found themselves swamped with domestic orders, 
and, not foreseeing the time when they might want 
export business year in and year out, neglected their 
new-found customers. 

Yet a foreign demand for many kinds of Ameri- 
can manufactured goods persisted. So great was 
our reputation for inventive genius and fabricating 
skill, that it could not be killed even by the atrocious 
practice, at one time quite prevalent, of dumping on 
the foreign market defective or obsolete stocks. 

The irresistible force of this demand met the im- 
movable body of lack of continued interest on the 
part of our manufacturers. Something had to hap- 
pen, and what happened was the export commission 
house. 

The export commission house was originally and 
still is, in theory at least, the resident representa- 
tive of foreign exporting and importing firms. It 
disposed of shipments to this market and sent back 
American products as ordered, all on a stated com- 
mission. As a selling agent, its duty to its clients 
obliged it to secure the highest possible prices for 
import consignments, and, as a purchasing agent, the 
lowest possible prices on American goods ordered 
for export. 

These functions naturally led many export com- ' 



24 AMERICAN METHODS IN FOREIGN TRADE 

mission houses into other activities, the first of 
which were international banking and shipping. 
Some of them, starting as commission houses, 
developed into trading companies of the European 
type, with branches and stocks of goods in various 
parts of the world, and others acting as tra- 
ding companies in some countries, developed a com- 
mission business in others. 

As our manufacturers became more interested in 
overseas markets, there came into existence the ex- 
port selling agent, whose exclusive function it was to 
promote the foreign distribution of the various prod- 
ucts he represented. The success of these newcomers 
led many export commission houses to take the sales 
agency for various lines, and many of those who 
were originally selling agents gained the confidence 
of foreign firms and began acting as purchasing 
representatives for goods for which they did not 
have an agency, thus acquiring the character of an 
export commission house. 

As a result of all this, there is a great deal of 
confusion in the minds of American manufacturers 
as to what is meant by the term "Export Commis- 
sion House,' ' for it is applied loosely to inter- 
national trading companies, foreign importers' 
resident buying representatives and American 
manufacturers' export selling agents. To add to 
the obfuscation, the same firm sometimes appears 
in several or all of these roles in different 
transactions. 

The important point for the manufacturer to 
keep in mind is what function a given firm proposes 
to perform, regardless of what it calls itself. Only 



THE EXPORT COMMISSION HOUSE 25 

by doing so can he decide how and to what extent 
it may fit in with his previously formulated export 
selling policy. 

The relation of the several types of export com- 
mission houses to a sound selling campaign will 
later be shown in the chapters in which policy is 
discussed. It may be here stated, however, that the 
American foreign sales manager believes in the ex- 
port commission house and his belief is based, not 
on the absurd sentimentality that because the in- 
stitution has in the past done much for American 
manufacturers it should now be supported, but on 
the unquestioned fact that it not only plays a role 
of great usefulness today, but also will always form 
a necessary part of our foreign trade machinery. 

Both the international trading company, which 
buys where it can to the best advantage and sells to 
anyone whose business needs make it worth while, 
and the resident buying house, which purchases, 
finances and ships on orders from overseas clients, 
make possible a large volume of foreign trade which 
can only be handled in this way. The manufacturer 
who can secure a share of this business without inter- 
ference with his agents or other detrimental effect 
on the machinery of his overseas distribution should 
do so. That the export commission house exists is 
proof of its usefulness, and the attitude toward it 
of the manufacturer engaged in direct exporting 
should be one of strict neutrality. The bad judg- 
ment of the radical direct exporters who refuse to 
accept any orders whatever through such established 
channels is only equaled by that of the ultra con- 
servatives who insist that all overseas customers 



26 AMERICAN METHODS IN FOREIGN TRADE 

deal through these intermediaries only. It is to be 
assumed that each foreign customer knows from 
experience how to buy to the best advantage and, 
unless the circumstances are very unusual, no in- 
fluence favorable or unfavorable to export commis- 
sion houses should be brought to bear on him by 
those who constitute his original sources of supply. 



CHAPTER V 
THE EXPORT SELLING AGENT 

The manufacturer who contemplates an aggressive 
export selling campaign must first decide whether 
he will place the management of it in the hands of 
a sales representative or entrust the handling 
of details to a salaried employee in his own office. 

There are many points for and against the ap- 
pointment of an exclusive export agent. A good one 
who has handled lines allied to the one newly taken 
on is often in a position, through previously formed 
connections with foreign buying houses, to make 
short cuts to immediate profitable business by the 
elimination of the necessity of establishing the 
standing of the maker and the quality of his product. 
He should very soon secure a considerable volume 
of trade by virtue of his own acquaintance with 
foreign buyers. 

A beginning in overseas trade can perhaps be made 
more economically through a fortunate connection 
of this kind than in any other way. In addition to 
the advantage of probable immediate orders, the 
export selling agent, whose organization is virtually 
a combination foreign sales department for all his 
manufacturing connections, is enabled to effect 
economies in overhead, office detail work, circulariz- 

27 



28 AMERICAN METHODS IN FOREIGN TRADE 

ing, employment of salesmen and other means of 
securing and handling orders. 

The export selling agent, if efficient, will also 
avoid the sometimes costly blunders and delays that 
so frequently characterize the early foreign trade 
activities of our manufacturers. 

There are, however, certain drawbacks and risks 
incident to the policy of placing an export campaign 
in the hands of an independent organization. The 
immediate object of the manufacturer should not 
be sales and profits, but the systematic up-building 
of good will and distribution. If he has the con- 
fidence in his line that every good American maker 
should have, he will regard the satisfying of the 
existing demand for goods such as he makes, not 
as the consummation of his efforts but rather as 
one of the means of developing an organization with 
which he can co-operate for the benefit not only of 
himself and his distributors, but of consumers. In 
other words, while taking such incidental profits as 
he legitimately can, he must keep in mind what he 
wants to accomplish eventually. For what will it 
profit him if he obtains many orders the first year 
but loses the greater opportunity of placing himself 
in an invincible position in foreign markets? 

The policy of the maker is an important factor 
in foreign trade and the export manager closely 
identified with his firm is usually a better interpreter 
of it than is a selling agent. The latter 's contract 
must, for obvious reasons, have a time limit which 
means that he is constantly tempted to regard the 
profitable order in hand as worth more than several 
in the, to him, uncertain future. This attitude 



THE EXPORT SELLING AGENT 29 

may sometimes create a situation in foreign mar- 
kets which it will take a manufacturer years of 
effort to overcome. An independent selling repre- 
sentative, working under a temporary agreement, is 
not often inclined to do the things that spell only 
expense in the present, but which may mean great 
advantage to the maker at a future time when the 
agent will perhaps no longer be in a position to 
claim the reward for his foundation-laying work. 

It may be argued that the right type of export 
selling agent will be sufficiently far-seeing to recog- 
nize that his future depends on the success of his 
manufacturing clients. There is some theoretical 
truth in this, but it is offset by the fact that every 
such agent has had the experience of losing accounts 
for which he had done good work because -someone 
else promised more or the client desired to assume 
direct control of his foreign trade. 

An agent who represents many lines is also open 
to the criticism of divided interest and, from any 
one client's point of view, presents the same un- 
desirable aspects as the salesman who handles a 
number of side lines. 

There also exists the objection, whose reality has 
been shown by the experience of many manufac- 
turers, that the exclusive export agent who keeps 
complete control of the business developed has the 
power of life or death over it and can, in retaliation 
for real or fancied wrongs, hold up his client for 
increased commissions or impose other similar bur- 
dens on him. This leads to a situation of watchful 
waiting on the part of the manufacturer for an 
opportunity of undermining the agent, in order to 



30 AMERICAN METHODS IN FOREIGN TRADE 

acquire his own hold on the trade and on the part 
of the agent to prevent this outcome. Such opposi- 
tion of interests can hardly be regarded as con- 
structive. 

Like the export commission house, the selling 
agent serves a very useful purpose. There are and 
always will be a large number of manufacturers who 
will not themselves make any earnest attempt to 
get a foothold in foreign markets, but who will co- 
operate with someone else in selling their products. 
The aggregate volume of business developed in this 
way is very large. Generally speaking, however, 
the manufacturers who are the leading exporters of 
their lines have entrusted their future to their own 
foreign sales manager either from the beginning or 
after a start had been made in some other way. 

There are some export selling agents whose 
efficiency, progressiveness and high-mindedness 
have been such that they have achieved wonderful 
success and their relations with their clients closely 
approximate those of a foreign sales manager. 

As in all other business relations, the practical 
results obtained by making a connection with an 
export selling agent must of course vary greatly 
with the character and ability of the man selected. 
As a rule the representative who builds up some 
business for a client only to lose the connection at 
the expiration of his contract, should take it 
philosophically. The existence of a pre-arranged 
time limit is a mutual recognition that such a pos- 
sibility existed from the first. If the change is to the 
advantage of the principal, the agent has no moral 
right to stand in the way and if it is not, the door 



THE EXPORT SELLING AGENT 31 

should be left open for his return to the fold, from 
which, having once departed to his disadvantage, 
he will scarcely be inclined to stray a second time. 
The success of the relation between manufacturer 
and export agent depends to an exceptional degree 
on fair-mindedness and consideration of the other 
man's point of view on the part of both parties 
to the arrangement. The former must give the lat- 
ter his due at all times and the latter must con- 
stantly keep in mind the fact that he cannot make 
a permanent success if he yields to the ever-recur- 
ring temptations to increase his own profits at the 
expense of the best interests of his clients or his 
foreign customers. 



CHAPTER VI 

THE EXPOET MANAGER AND THE EXPORT- 
ING MANUFACTURER 

The successful export manager closely identified 
with the manufacturer's selling organization is 
either a man (or woman, for several women are 
prominent in this field) who in the course of his 
work developed into a good business man, saturated 
with American ideas and ideals, or one who reached 
this stage of development in domestic work and later 
turned his attention to the foreign trade field. 

He is usually an American by birth or at least 
in training. There are a few notable exceptions of 
foreign antecedents, but they are in every instance 
men of great adaptability and open-mindedness who 
quickly assimilated American methods and prin- 
ciples and made them the mainspring of their work- 
ing equipment. 

The manager of foreign sales who has in the past 
been responsible for the great world trade of many 
of our manufacturers did not as a rule bring to his 
task a knowledge of export or any special ac- 
quaintance with overseas markets. Usually he had 
not had any special training for the work. His start 
was much like that of any young American in other 
branches of business endeavor. His chief equip- 
ment was an early training in our traditions, innate 

32 



THE EXPORT MANAGER 33 

breadth of vision and a good education in the funda- 
mentals at least. His success was simply a normal 
manifestation of the American genius for salesman- 
ship in a new field. 

It would be idle to deprecate the great value of 
special training in overseas selling and some very 
valuable work has been done along these lines. More 
should and will be accomplished. Nevertheless an 
acquaintance with export sales methods, the theory 
of good export practice, foreign languages, overseas 
trade facilities and conditions in world markets can 
always be acquired and is secondary in importance 
to the character and caliber of the man. Some of 
the greatest failures in the history of American ex- 
porting have been made by men with an ideal equip- 
ment and training who did not naturally and readily 
comprehend all humanity in their scheme of life — 
men to whom frontiers were real rather than im- 
aginary lines. 

Lack of a high order of executive ability will mar 
an otherwise ideal equipment and training for the 
work of an export manager. There is a field for 
such men — that of the export technician who serves 
as the export manager's right-hand man, relieving 
him of the burden of supervising the details of the 
work of the department. In a highly developed or- 
ganization the export manager should be the strate- 
gist whose field operations are carried out in all 
markets by one or more tacticians who for want of 
a better name have come to be called export techni- 
cians. It is needless to say that any tactician may 
with experience develop strategic ability. 

To achieve a lasting success in export sales work 



34 AMERICAN METHODS IN FOREIGN TRADE 

/is one of the severest tests of character.' Without 
possessing in some degree such qualities as breadth 
of vision, executive ability, a fair and open mind, 
ingenuity, farsightedness, systematic industry, 
patience, intellectual and moral honesty and prac- 
tical idealism, only a moderate success can at best 
be achieved. 

To erect a strong trade structure in other lands, 
the export manager must have the breadth of vision 
which will enable him to project himself into the 
environment of distributors and consumers there, 
examine all questions from their point of view and 
harmonize them with the legitimate interests of his 
own firm. 

He must have executive ability, multiplying him- 
self through subordinates in order that his con- 
stantly increasing volume of trade may be so 
handled that the spirit of his successful policy may 
not be transformed into a perfunctory attention to 
customers ' expressed requirements. 

He must at all times be not only fair from his 
own point of view but also make it very clear that 
his mind is open — that he has no opinions or ideas 
that are not subject to revision or rejection if sound 
reasons are advanced for so doing. Hasty decisions 
that either will not stand careful analysis or have 
the appearance of unfairness, however just they 
may be if all the facts are known, have a disastrous 
influence on relations with foreign buyers whose 
geographical remoteness make man-to-man talks a 
practical impossibility. 

The export manager must be ingenious. There 
frequently arise unexpected situations where, for 



THE EXPORT MANAGER 35 

the 'good -of all concerned, something out of the or- 
dinary must be done. Outside of the limited oppor- 
tunity offered by cable service, it is impossible to 
consult with the customer and the man who in such 
cases makes a practice of cabling for instructions 
instead of asking for explicit approval of some 
definite step that he himself believes advisable, will 
never achieve results out of the ordinary. 

The farsighted man will of course prepare in 
advance to deal with such emergencies insofar as 
it is humanly possible to anticipate them. There 
were many instances while the World War was be- 
ing waged where an export manager, foreseeing the 
effect of war conditions on his line of industry, was 
able to do his foreign distributors a signal service 
by his forehanded advice. 

It is not enough, however, to be able to take the 
other man's point of view and know how to co- 
operate with him, for many who can if they will, 
do not do this. Only the really industrious and 
systematic man can spare the time not only to think 
for his customers but to act in their interest. The 
great distances involved make the procrastination 
of the lazy a serious obstacle to the development of 
foreign trade. 

He who, having done all possible to accomplish an 
object, does not know how to await results with 
tranquillity has no place in export work. Patience 
is an important factor in foreign trade building. 
Overseas buyers, accustomed to other lines which 
are in demand in their communities, would in the 
long run be very undesirable people for anyone to 
do business with if they were inclined to take on 



36 AMERICAN METHODS IN FOREIGN TRADE 

new sources of supply overnight. Entirely new 
lines may of course be added much more quickly in 
comparison, though even here the necessity of 
educational work on the part of the manufacturer, 
the time required by the importer for an investiga- 
tion of the possibilities in the territory he serves, 
the careful estimation of his own ability to finance 
the increased business and other similar considera- 
tions cause delays that tax the patience of the ex- 
port manager to the limit. 

Nothing can have a more disastrous effect on an 
export selling campaign than intellectual or moral 
dishonesty on the part of the man in charge of it. 
Temporary success may result but time is sure to 
reveal serious defects in the distributing machinery 
built by such a workman. 

Practical idealism plays a greater part in foreign 
selling than in almost any other line of commercial 
endeavor. Great success attends the efforts of the 
man who is endowed, to any considerable degree, 
with the qualities that we have thus far considered, 
but triumph over all competition waits on the labors 
of him who adds to them a broad conception of 
his duty to humanity. He who, possessing many 
good qualities persists in using them for essentially 
selfish, even though enlightened aims, may accom- 
plish much in international commercial exchange, but 
he is a pigmy compared to the man who has the 
same mental and moral equipment plus the all- 
pervading influence of a genuinely sympathetic 
understanding .of his brother men wherever they 
may be and whatever their race, color, customs and 
environment. 



THE EXPORT MANAGER 37 

The association of an export manager who to any 
considerable degree embodies these characteristics, 
with a manufacturer whose standards and methods 
are at variance with all that he sets out to accom- 
plish, is little short of tragic. 

Such a manufacturer not only does not deserve 
the services of a really good export manager, but 
for his own material good should not have them, 
because to him they are not worth what they cost. 
No matter how great the ability of the man or how 
transcendent the excellence of his innate qualities 
and acquired training, he cannot, thus handicapped, 
wage a good fight for world trade. He must have 
confidence in the product and in the man who makes 
it. He cannot send beyond our frontiers a message 
that he does not first receive. He cannot success- 
fully preach a gospel which he is prevented from 
living. The money changer may desecrate a temple 
without discomfort to himself, but the high-minded 
man whom circumstances force to live in a brothel, 
either ceases to be himself or fights his way intd 
better surroundings. 

The ideal exporting manufacturer is one who re- 
gards himself, not as a divinely appointed purveyor 
to the needs of other less able men, but as the 
privileged director of facilities of production that 
are necessary to society's welfare. He thinks not 
so much of his rights as his blessings, not so much 
of his talents themselves as of what they can do 
for the world, humbly acknowledging that the quali- 
ties of mind that make him a leader are largely 
unearned blessings and not a reason for deserved 
self-congratulation. 



38 AMERICAN METHODS IN FOREIGN TRADE 

The ideal exporting manufacturer is a believer in 
industrial democracy. He knows that he is honored 
by the power to control and direct the facilities 
which his own or ancestral constructive ability has 
created. He knows also that he is justly entitled to 
compensation far beyond the earnings of the aver- 
age man. But with all this there is the realization 
that he owes a solemn duty to the thousands, per- 
haps millions, who need and use his products, that 
in proportion as he serves he will be rewarded and 
that partial or complete failure in his stewardship 
means partial or complete failure for him. The 
ideal exporting manufacturer is he who, calm in his 
achieved success and with an accurate estimate of 
himself and his abilities, goes into world markets not 
alone to make the profit which is essential to prog- 
ress, but also because he would be false to himself 
if he overlooked the opportunity of taking his place 
in the far-flung line of those who are fighting for 
human advancement. 

By these standards, the manufacturer who con- 
templates the building up of world distribution, 
should measure himself. And by these standards 
also, should he be measured by the export manager 
who, having first satisfied himself as to his own 
qualifications, undertakes the immediate supervision 
of the work. 

Both the manufacturer and the export manager 
should realize that the worth-while man is not the 
peculiar product of any country or clime. Race 
and nationality are not the distinguishing marks of 
excellence. The good and the bad exist everywhere 
in about the same proportions and commercial sue- 



THE EXPORT MANAGER 39 

cess attends him who goes into world markets well 
equipped, convinced that he will find good and, while 
protecting himself from the bad, can utilize even it 
to good ends The American exporter is blessed 
with an assignment of unusual possibilities, enabling 
him as it does to carry to every corner of the world 
some of the spirit of the United States of America. 



CHAPTER VII 
THE EXPORT DEPARTMENT 

The term "export department' ' is loosely applied 
to the salaried export manager and his part of the 
manufacturer's selling organization, to separate 
companies handling one or more lines and organized 
to operate independently but under the same control 
as the parent firm or firms and even to the staffs 
maintained by selling agents representing a number 
of products and controlled only by the terms of the 
agreement with each client. 

Strictly speaking "export department" refers 
only to the personnel wholly or partially under the 
direction of the closely associated foreign sales 
manager, but, for our purposes, it may be extended 
to include separate companies organized and con- 
trolled by the manufacturers whose lines are 
handled. 

There is some divergence of thought as to the 
advisability of associating and co-ordinating foreign 
trade efforts with the activities of the domestic sales 
department under the supervision of the general 
sales executive or of organizing separately with a 
full personnel under an executive responsible only to 
the general management. 

These differences of opinion among export man- 
agers are due to the peculiarities of the experience 

40 



THE EXPORT DEPARTMENT 41 

of each. The possibilities of the "built-in" export 
department, to use the phrase of Mr. Walter F. 
Wyman, one of its strongest advocates, vary with 
the caliber and disposition of those on whom de- 
pends the proper handling of credits, collections, 
shipping and other routine work. If these men, 
trained only for the domestic field, have not the 
capacity for development, they may, by their nar- 
rowness of vision and lack of adaptability so seri- 
ously hamper the export manager's activities that 
either he must make the best of a bad situation 
while building up a sufficient volume of business to 
warrant the gradual organization of his own staff 
of helpers, or the obstructionists must be removed 
and replaced by better men, on the initiative of the 
general management. 

The advantages to the firm of the built-in export 
department charged only with its fair overhead and 
working in harmony with the domestic organization, 
are manifold. The best foreign trade policies and 
methods are usually those evolved in sales work 
within our borders and adapted to the conditions 
encountered in each overseas market. The export 
manager who is closely associated with a general 
sales executive of long experience with the line is 
greatly helped by the advice and assistance that is 
thus at his disposal. Conversely, the work done in 
foreign markets often develops methods and ideas 
that can be applied in home merchandizing with 
excellent results. 

There is a distinct payroll economy in combining 
the domestic and foreign selling organizations and 
the broadening experience of dealing with the vary- 



42 AMERICAN METHODS IN FOREIGN TRADE 

ing problems of world trade makes every employee 
worth more to his firm and to himself. 

There are many cases, however, in which a 
separate department seems advisable. Some inland 
manufacturers find it advantageous to locate their 
foreign sales office in New York. The successful 
exportation of many products involves engineering 
or other problems that are so distinctive abroad, 
that only by the maintenance of an entirely separate 
organization can the best results be secured. 

There seems to be a mistaken impression among 
manufacturers with little or no experience in over- 
seas trade that, in order to build up a foreign busi- 
ness, it is necessary to create and maintain, at great 
initial expense, a full-fledged export department 
with its complement of helpers. Nothing is further 
from the truth. Such a step is, as a matter of fact, 
inadvisable, for, in foreign as well as in domestic 
trade, organizations, to be sound, must as a rule be 
developed rather than put together like a picture 
puzzle. 

An active, intelligent, suitably equipped young 
American with a stenographic helper, is enough for 
a beginning. Select him carefully with the char- 
acteristics of the ideal export manager in mind, 
provide him with a library of reference works and 
with facilities for correspondence translation 
and securing credit and other information, see that 
he gets all necessary co-operation from the sales, 
credit and shipping departments and back him up 
with a conservative appropriation for publicity, 
circularizing, postage and incidentals. If you pick 
the right man, provide him with these helps and 



THE EXPORT DEPARTMENT 43 

have the patience to stand by him while he works 
out his salvation, you will have an export depart- 
ment before you realize it. 

Don't expect miracles. If you are making a good 
article that is in profitable demand at home, you 
can, unless the circumstances are very exceptional, 
look forward to a worth-while foreign trade. But 
distances are long, your name probably means little 
or nothing in overseas markets, the best business 
men abroad are at least as conservative as they are 
within our borders and there are the invariable un- 
foreseen obstacles to be surmounted. 

If you started your own business, recall your first 
years of foundation-laying work and remember that 
your export manager is going through the same 
character-testing experience, less trying perhaps, 
without the problems of production with which you 
had to wrestle, but certainly more difficult in other 
respects. 



CHAPTER Vin 
THE EXPORT SELLING PLAN 

Regeettablb as the fact may be, it is obviously 
impossible to outline in detail a practical export 
selling plan for all manufacturers. The methods 
that must be used vary greatly with the nature of 
the line, with the character of the available means 
of distribution in foreign markets and with the con- 
ditions under which each line of goods is sold and 
used abroad. 

The only general rule that can be applied is that 
the plan in each instance should be an adaptation 
of the domestic system of selling. Human beings 
everywhere are much alike and have developed 
about the same institutions. Each manufacturer 
should start out with the intention of locating 
facilities similar in function to those employed in 
domestic selling and then develop a plan for using 
them in much the same way, subject to slight varia- 
tions in surface details. He must not allow himself 
to be confused or misled by names. A credit report- 
ing bureau may be in just as good odor under an- 
other designation. A buying firm should not, be- 
cause it is labeled " export commission house,' ' be 
confused with a selling agency. A foreign importer 
may or may not be a jobber. The name is not im- 
portant. The function performed is the only thing 
to be considered. 

44 



THE EXPORT SELLING PLAN 45 

At this point the manufacturer should be warned 
that this is not intended to confirm him in his ad- 
herence to preconceived ideas as to how people must 
do business with him. On the contrary, what is 
meant is that the export selling plan, while involving 
some departure from such ideas, need not be revolu- 
tionary in principle. The maker who contemplates 
a campaign in direct exporting should not, after 
vainly trying to find a way to do abroad exactly 
what he is doing at home, become discouraged and 
wish the whole thing off on an agent or commission 
house just for that reason alone. In succeeding 
chapters, it will be shown that the intelligent and 
diligent seeker will be rewarded by the discovery of 
the existence of the very materials he needs for 
constructing his distributing machine. 

The selling plans that are the backbone of the 
world-wide trade of our successful exporting manu- 
facturers, have been, in one sense, gradual develop- 
ments. Few if any of them were worked out in 
clearly defined detail before a start was made. They 
were the outcome of a determination to find out the 
way to use abroad the fundamental methods ac- 
cepted as best for each line at home. No instance 
comes readily to mind where unusual success has 
resulted from discarding American selling methods 
for the adoption of those that obtain in Europe. 
It seems to be essential to carry into foreign mar- 
kets the best that Americanism stands for and use 
it, not in a narrow and selfish way, but with the 
profound conviction that, just as the possession and 
intelligent exercise of American business ideals 
bring a certain return at home, they cannot fail to 



46 AMERICAN METHODS IN FOREIGN TRADE 

be recognized by human beings everywhere as 
worthy of reward and emulation. 

For the manufacturer of highly elaborated 
products who attempts direct exporting, the first 
diverging paths between which he must choose are 
represented by the exclusive agency plan and its 
general merchandizing alternative. When he 
reaches this point it is far better for him to do some 
good hard thinking about his home experience 
rather than to depend entirely on the advice of 
others. Unfortunately there are at large a great 
many self-constituted foreign trade advisers, some 
of them honest and disinterested and others self- 
seeking, who from their own narrow experience or 
deliberately to serve their own ends, advocate one 
or the other of these plans or even the abandonment 
of the idea of direct exporting, without regard to 
the nature of the line or the manufacturer 's internal 
situation. 

When such outside advice is considered, too much 
stress cannot be laid on the importance of ascer- 
taining the nature of the experience or known facts 
on which it is based. It is quite remarkable how 
often a manufacturer who makes, let us say, a line 
of hosiery and who, if he were contemplating enter- 
ing the Pacific Slope market would never dream 
of being guided by a man who had sold pianos there, 
will nevertheless be influenced in laying out an ex- 
port campaign by a typewriter salesman who has 
traveled South America, by a representative of 
some export house whose chief interest is keeping 
trade in the hands of his firm or by a wandering 
South American who, at a tender age and without 



THE EXPORT SELLING PLAN 47 

any business experience in his own country, came 
to the United States to seek the fortune that was 
more likely to be found in his own door yard. 

If the manufacturer with his supposed good busi- 
ness sense and his special acquaintance with his own 
line of goods will but exercise his own judgment 
after reading the succeeding chapters, he should 
have little difficulty in making a wise decision. Let 
him first determine to his own satisfaction whether 
or not his product is one that in the home market 
requires, or could be sold to advantage by, exclusive 
agency arrangements. If the decision is affirmative, 
the chances are that this plan must be used abroad 
to attain the best results. If, on the other hand, the - 
manufactured article is best marketed at home 
through a policy of general merchandizing, some 
very good reasons should be found for departing 
from this method. 

The tendency on the part of American manu- 
facturers to let someone else do their thinking in 
export matters, to farm out the foreign field as a 
temporary makeshift or to await the fruition of 
some governmental project which they hope will, in 
some undefinable way, open up for them an easily 
traveled road to overseas success, is a very great 
obstacle to our progress in world trade. If they 
will but devote to the task of finding and following 
their own way the zeal and determination which 
characterized their early efforts to establish their 
home trade, more will be accomplished than by the 
success of any or all of the schemes that ever have 
or ever will be formulated to do for them what they 
not only should but must do for themselves. 



CHAPTER IX 
SELLING THROUGH EXCLUSIVE AGENTS 

The exclusive agent in foreign markets is an 
individual or firm acting to all intents and purposes 
as a factory selling branch but without the active 
participation of the home office in either the finan- 
cing of local transactions or in resulting profits. In 
all other respects the relationship is or should be 
much the same. 

Exclusive agents should not be confused with ex- 
clusive dealers who are discussed in the next 
chapter. The agent orders and resells, carries a 
stock of parts, makes repairs and adjustments, joins 
with the manufacturer in sales promotion work in 
the territory— in short does all that a capable man- 
ager of a factory selling branch would do in his 
place. The sole difference lies in the fact that he 
finances all orders, sells for his own account and 
takes all of the profit. 

Only in exceptional cases are bona fide American 
factory branches a success in foreign selling. The 
reasons are not hard to find. The manufacturer, 
being quite unknown in overseas markets, must 
struggle for recognition not only of the quality of 
his goods, but also of his own standing, which must 
be established with each individual buyer. He must 
carry the burden of financing his own import ship- 

48 



SELLING THROUGH EXCLUSIVE AGENTS 49 

ments and the extension of local credits, while 
operating in a strange country and relying entirely 
on salaried executives where dependable men of 
ability are at a high premium. The exclusive agent, 
carrying the financial burden for the sake of profit, 
accomplishes, if carefully selected and properly 
handled, all that could be hoped of a factory branch 
besides contributing as a factor of great value, his 
own established standing in the market he serves. 

The appointment of exclusive foreign agents or 
the establishment of factory branches is an absolute 
requisite for products whose successful sale involves 
mechanical, technical and scientific knowledge of 
them. Lines requiring expert demonstration, highly 
developed repair facilities or skilled attention sub- 
sequent to their acquisition by the user may be sold 
in a limited way without such representation, but 
dissatisfaction on the part of buyers who have no 
one near by to turn to for help in case of difficulty 
often makes such sales a positive handicap to the 
development of the territory by an agent when one 
is appointed. 

Some of the American lines which have succeeded 
best abroad by making exclusive agency arrange- 
ments are household and office specialties, agricul- 
tural machinery, special machinery, automobiles, 
engines, boilers, motors, etc. 

The greatest of care should obviously be exercised 
in appointing exclusive agents abroad. The first 
considerations are their standing in local circles and 
their ability to cover their territory effectively and 
finance the expected volume of trade. The largest 
houses are nGt always the best. The man who has 



50 AMERICAN METHODS IN FOREIGN TRADE 

succeeded sometimes ceases to supply the driving 
power which built up his large business. The most 
effective agent for a new line, all other conditions 
being satisfactory, is not the firm that is large now, 
but the one that is likely to be very large five or ten 
years from now, because the new line, in proportion 
as it contributes to this growth, is correspondingly 
benefited. - , 

Make sure, by stipulations as to volume of busi- 
ness to be attained during each succeeding year, 
that your prospective agent is not trying to "box" 
your line in favor of another. Do not make the 
territory larger than the representative can prove 
his ability to cover or finance. Avoid entering into a 
binding contract at the outset. Try to inspire a feel- 
ing of confidence in the integrity of your own inten- 
tions which will make the agent feel that if he makes 
good under a tentative informal agreement, designed 
to afford protection against difficulties unforeseen by 
either of you, he will be given the opportunity to 
become a permanent part of your selling or- 
ganization. 

Once you have appointed an agent on an experi- 
mental or formal contract basis, co-operate with 
him in every feasible way. Do not accept a com- 
mission house order without learning its destination 
so that the proper commission may be credited on 
everything originating in his territory. Instruct 
him diplomatically in the sales methods that you 
have found successful at home, so that he may adapt 
them to local conditions. Consult with him on all 
matters of sales promotion in his territory. 
Originate circular matter giving his name and ad- 



SELLING* THROUGH EXCLUSIVE AGENTS 51 

dress as local agent to be criticized or approved by 
him, printed by yon and sent ont either by him 
or- by yon to prospective customers whose names 
have been previously compiled by one or both of 
yon. Give him a little the best of it in yonr adjust- 
ments rather than stand out for the strict letter of 
your rights. Only by proving that you have his 
personal interests at heart can you expect to build 
up a business friendship on the strength of which 
will depend to a' large degree your success in his 
part of the foreign field. 

Above all strive to impart to all agents every- 
where the spirit of co-operation for the benefit of 
users of your line. Imbue them with the confidence 
in your product which permeates your domestic 
organization and which has to no small extent con- 
tributed to your success, 



CHAPTER X 

GENERAL MERCHANDIZING IN FOREIGN 

MARKETS 

Howevee complex its manufacturing process, a 
product which, when complete, is a simple one which 
men, women and children everywhere know how to 
use instinctively or because of long familiarity with 
it should as a rule be sold abroad either to all im- 
porting jobbers who can handle it or to every re- 
tailer who has facilities for importation. Such a 
line does not require exclusive representation as 
described in the preceding chapter. 

It is quite true that makers of some articles of 
this kind which are sold in the United States by the 
exclusive dealer method have found the same sys- 
tem of distribution to be advantageous in foreign 
countries. The best example of this is the case of 
trade-marked lines of American shoes, in market- 
ing which, at home and abroad, many of our largest 
manufacturers have found it good business to con- 
fine their dealings to one merchant in each town, 
city or city district, rather than make it difficult 
for any one dealer to carry a complete stock, by 
scattering the profit among a number of retailers. 
The exclusive dealer or, more accurately, the ex- 
clusive retailer plan, works well abroad for lines 
that find it beneficial at home and all makers of 

52 



GENERAL MERCHANDIZING 53 

general merchandize will do well to carry into the 
foreign field their practice of not selling to the small 
store across the street from the established dealer 
who has built up a neighborhood demand for their 
goods. 

General merchandizing through foreign dealers 
is much the same as in the domestic market. There 
are some differences, due to the greater distances 
between factory and merchant, to ocean transporta- 
tion, to local conditions and to variations in lan- 
guages, customs and seasonal demand. 

Owing to the manifest impossibility of replacing 
merchandize quickly, the foreign dealer must carry 
a large stock and, his turnover being less frequent 
than that of a domestic merchant doing the same 
volume of business, his margin of profit must be 
greater and his average stock order larger. These 
facts must be kept in mind by the manufacturer 
in calculating his probable selling cost, passing on 
credits and considering other questions concerning 
his relations with his retailing partners beyond our 
frontiers, for it is only by intimate familiarity with 
the conditions under which the distributor is work- 
ing, that the most effective co-operation can be 
extended. 

The variations in procedure due to ocean trans- 
portation are not difficult for any good shipping 
department to master. Adequate facilities are in 
existence. Select a good freight forwarding house 
and consult with it. The question of packing for 
ocean shipment and to meet local conditions has 
never troubled a manufacturer who was really in 
earnest about foreign trade. The subject may be 



54 AMERICAN METHODS IN FOREIGN TRADE 

dismissed with the emphatic reminder that the 
foreign buyer must get what he wants in this re- 
spect. His demands are based on conditions in his 
market and only by a recognition of this fact can 
the manufacturer hope to build up a large foreign 
trade. 

The foreign language question is not a serious 
one, for the work done by our pioneer exporters 
has resulted in the upbuilding of facilities for 
corresponding, circularizing and cataloging in any 
commercial tongue. Every manufacturer should 
use these facilities in preference to having this work 
done in his own office or home city by an itinerant 
translator over whom no adequate supervision can 
be exercised. 

There is, strictly speaking, no such thing as sea- 
sonal demand in export trade. It is true that re- 
tailers of some products or all merchants in some 
one country order at a particular time of the year 
more heavily than at others, but there is no fixed 
rule regarding this. Seasonal lines in the volume 
of trade are obliterated by the large but varying 
degree of prevision which foreign buyers exercise 
in order to make sure of an adequate stock at all 
times. 

Co-operation in developing a consumer demand 
should be carried beyond the limits that obtain in 
domestic work of this kind. The foreign merchant, 
as a rule, lacks that general familiarity with sales 
promotion methods that is one of the chief assets 
of our domestic retailer. He must not only be 
helped by definite suggestions, but instructed in 
possible ways of carrying them out. This educa- 



GENERAL MERCHANDIZING 55 

tional work is one of the things which distinguishes 
the campaigns of American makers from those con- 
ducted by competitors of other countries. Wherever 
our progressive exporting manufacturers have gone 
they have strengthened and established existing 
merchandizing organizations and developed new 
ones. This highly constructive consideration for 
the independence and general welfare of the mer- 
chant is one of the factors that has enabled our 
exporters to disregard price competition and made 
them, many years before the great War began, the 
bugbears of European trade scouts. 



CHAPTER XI 
DETERMINATION OF EXPORT PRICES 

Having decided to his own satisfaction whether 
he should adopt the exclusive agency or the general 
merchandizing plan, one of the first things that the 
manufacturer must do is to determine what his ex- 
port prices should be. It is impossible to formulate 
any fixed method for doing this, but some general 
suggestions that should prove helpful can be made. 

Where the exclusive agency plan is adopted, all 
dealings will, eventually at least, be confined to 
agents. The best practice in such cases has hereto- 
fore been to quote F.O.B. New York or other United 
States port, a price covering cost, export selling 
expense (including advertising and other co-opera- 
tion extended to agents) and profit. Such quota- 
tions are usually made in the form of a schedule 
of list prices to which apply discounts theoretically 
covering the profit of the agent and his sub-agents, 
with a final discount for cash. 

Some experienced exporters, having built up an 
established business and having agents everywhere 
to whom prospective customers can be referred to 
advantage, have discarded the cumbersome list and 
discount method of quoting, in favor of confidential 
net prices supplied only to such agents. Where a 
sale in a territory not covered by an agency is but 

56 



DETERMINATION OF EXPORT PRICES 57 

a remote possibility and can be handled as an ex- 
ception, this has its advantages but it is scarcely 
to be recommended to the beginner for whom the 
securing of a few direct orders at a list price less 
the first discount, but not the second which repre- 
sents the prospective agents ' profits, may be the 
means of securing representation which it might be 
difficult to obtain without such previous demonstra- 
tion of the salability of the product. 

Similarly a schedule of list prices with discounts 
representing wholesale and retail dealers' profits 
with a final discount for cash are usually worked 
out for lines to be sold by the general merchandiz- 
ing plan. 

In calculating export prices the manufacturer 
should anticipate that the selling cost will, under 
exclusive agency arrangements, average from 20% 
to 35% more than it does when the same method is 
used at home. Under the general merchandizing plan 
the increase in selling cost will be slightly less, prob- 
ably averaging from 10% to 25% more than in the 
domestic market. This, combined with the fact that, 
as previously explained, the local distributor abroad 
must have a wider margin of profit than is cus- 
tomary in the United States, makes it advisable that 
all list prices for export should range somewhat 
higher than in domestic selling. 

It is probable that, unless the manufacturer is 
fortunate enough to secure previously the services 
of an export manager with exx^erience in his line, 
the range of prices established at the beginning will 
later require some revision up or down. This is 
not a difficult matter, for if the various factors have 



58 AMERICAN METHODS IN FOREIGN TRADE 

been analyzed and given careful consideration by a 
prudent man, the revision will usually be downward. 
It is obviously better to start with prices a little 
too high rather than a little too low as, if selling 
methods are sound, this will have no retarding in- 
fluence in the beginning and the subsequent lowering 
of prices to old customers can only result in benefit 
if it is done diplomatically. 

In determining what your export prices are to be, 
do not attempt to find out what similar goods are 
selling for and then try to meet these figures. You 
know or should know your costs. Allow yourself 
a fair profit and go out and fight for recognition 
like the good American business man that you are. 
If your prices are higher than your European com- 
petitor's, remember that it is human nature to at- 
tribute superior quality to the article which com- 
mands a higher price. Remember too that the per- 
centage representing the difference in net cost 
F.O.B. port of origin between two similar articles, 
figures less to the overseas user who must pay for 
either a price which includes this cost plus the same 
transportation charges, the same selling expense 
and in many cases the same import duty. 

There is a distinct trend toward the extension 
of the practice of quoting export prices C.I.F., that 
is, covering Cost, Insurance and Freight, or C.I.F.C, 
covering these items and Consular fees, thus giving 
the foreign importer an exact idea of the cost of 
the goods delivered at his port of entry. These 
prices are quoted subject to variations in insurance 
and freight rates, and deliveries are only guaran- 
teed under carefully prescribed conditions designed 



DETERMINATION OF EXPORT PRICES 59 

to protect the exporter. Where such quotations can 
safely be made, it is very helpful to the foreign 
buyer especially in negotiations with new sources 
of supply, and it is to be hoped that the marine 
insurance and transportation companies will in the 
future facilitate in every possible way the attempts 
of our manufacturers to quote delivered prices to 
their overseas customers. 

Those who in their domestic selling operations 
attempt to fix the prices at which their goods should 
retail will find it practically impossible to carry 
this policy into foreign markets, though in some 
cases it can later be worked out to a limited extent 
by co-operation with exclusive agents. Price main- 
tenance is a difficult matter in countries where the 
local currency is not on a gold basis and is conse- 
quently subject to wide fluctuations or where the 
primitive state of transportation sometimes makes 
the cost of an article to a dealer in mountain regions 
double what his compatriot in a coast town pays for 
it. Plan to get your price F.O.B. United States port 
or C.I.F. and leave to agents and dealers the prob- 
lem of fixing exact retail prices. 

Generally speaking it is not good business to sell 
anywhere except at a fair profit. As repeatedly 
stated in previous chapters our success in exporting 
most lines of manufactured goods does not depend 
on meeting price competition but rather on the 
quality of our products and the co-operation ex- 
tended to distributors based on a sympathetic ap- 
preciation of the circumstances under which they 
are working. 



CHAPTER XII 
MAKING A START IN DIRECT EXPORTING 

The high development of direct relations between 
exporting manufacturers and their foreign cus- 
tomers and the consequent bridging of the gap 
between producer and consumer is but a logical ex- 
tension of the tendency to eliminate unnecessary 
middlemen in our national distribution. It is not 
so much a question of the money saving involved, 
for sometimes no saving results. The improved 
service rendered and the good will built up by our 
manufacturers who take off their coats and work 
with and for their distributors and consumers, have 
been powerful factors in our fight for a share of the 
trade of all foreign markets. 

For Europe still clings and, from all signs now 
visible, will continue to cling, to the methods of our 
forefathers. In all the manufacturing countries of 
the Old World, the producers do not know very much 
about selling their own products and care altogether 
too little about what becomes of them or what 
service they give, after they are sold. They are 
inclined to content themselves with solving the ad- 
mittedly serious problems of production, leaving the 
equally important work of selling to agents and 
jobbers who are much interested in their own 

60 



MAKING A START IN DIRECT EXPORTING 61 

profits, but concern themselves but little with the 
future of the producers of the goods they handle. 
Yet we are urged to forgo this, our great competi- 
tive advantage, by nationalizing our foreign trade, 
and merging our great selling organizations into ex- 
port jobbing combinations to the complete oblitera- 
tion of individual prestige and distinctive sales- 
manship ! 

The manufacturer who decides to do a direct ex- 
port business on the exclusive agency plan, having 
fixed a tentative schedule of prices, must next take 
steps to find and appoint his agents. This may be 
done by sending a representative to make a personal 
investigation, by circularizing a selected list of pos- 
sible representatives or by advertising either in an 
export publication or in local media in each territory. 
Probably a combination of at least two and perhaps 
all of these methods gives the most satisfactory 
results. 

There is nothing to be said against the effective- 
ness of the personal visit. Probably by no other 
means can the manufacturer so quickly pass on the 
qualifications of a prospective foreign agent. Yet 
the task of a man, however competent, sent, for 
example, to Buenos Aires, to find and open negotia- 
tions with the best possible firm or individual to 
represent an unknown house with an unknown line, 
is a difficult assignment. Many American manufac- 
turers have dispatched such emissaries only to dis- 
cover, much to their surprise, that their excellent 
home reputation had not preceded them into the 
foreign field and that much more satisfactory re- 
sults would have been secured had some preliminary 



62 AMERICAN METHODS IN FOREIGN TRA.DE 

or simultaneous circularizing or advertising been 
done. 

Many makers have secured suitable foreign 
agents through correspondence originated by a com- 
bination of skillful circularizing and advertising. 
This process may be slower, but by virtue of the 
large number of prospects covered, it frequently 
reveals possibilities of highly advantageous connec- 
tions with firms whose interest in the product would 
not have been discovered by a personal representa- 
tive of the manufacturer. Foreign importers often 
take on with great success lines totally unrelated to 
their previous activities. The task of uncovering 
such prospective sales agents by a personal canvass 
of the field is not an easy one. 

In making a start in general merchandizing ex- 
actly the same methods may be used. Here the 
immediate objective is of course the securing of 
initial orders from established merchants instead of 
the making of agency arrangements and even more 
emphasis should therefore be laid on the importance 
of preliminary circularizing and advertising. To 
approximate the highest possible volume of trade 
in any territory, personal work either on dealers 
or through agents is without doubt an essential, but 
many ill-considered journeys through foreign mar- 
kets haye been made by salesmen who, unsupported 
by previous preparatory work, have found them- 
selves obliged to forget their original intention of 
making their trips profitable, devoting their efforts 
instead to the missionary work that might well have 
been done from the home office. Such changes 
in plan have frequently proved profitable in the long 



MAKING A START IN DIRECT EXPORTING 63 

run, but that much discouragement and loss of time 
might in these cases have been avoided by a more 
intelligent use of all the modern means of sales pro- 
motion, is not to be doubted. 

There are many instances of exceptional success 
in general merchandizing campaigns where no one 
has ever been sent abroad to represent the manu- 
facturing firms. Intelligent and persistent adver- 
tising and circularizing with careful attention to re- 
sulting correspondence in time developed demand in 
many countries to a point where the lines became 
attractive to local selling agents who now act as 
resident salesmen for them. Such representatives, 
who sell on commission for the manufacturer's ac- 
count, should not be confused with the exclusive 
agents whose function is discussed in Chapter IX, 
for their work is strictly analogous to that done by 
traveling salesmen in this country. The employ- 
ment of this means of building up a foreign trade 
will be more thoroughly discussed in Chapter XVI. 

There is nothing difficult or mysterious about 
making a start in direct exporting, which,, as the 
term implies, means the maintenance of direct re- 
lations with foreign buyers, be they exclusive agents 
or dealers. This does not by any means signify 
that orders may not be handled through export 
houses. The employment of these facilities as buy- 
ing and shipping representatives depends largely on 
the volition of the foreign importer who may or may 
not prefer to do business through them. In no case 
should the manufacturer attempt to stipulate 
through whom purchases shall be made. He has a 
right to ask for his price, regulate terms and assure 



64 AMERICAN METHODS IN FOREIGN TRADE 



himself as to the credit risk, but beyond this point 
he is in the hands of his overseas distributors with 
whom it is his privilege and duty to co-operate, but 
to whom he cannot dictate. 



CHAPTER X.* 







CIRCULARIZING BY THE BEGINNER IN 
DIRECT EXPORTING 

Cieculakizing and advertising play much the same 
parts in foreign as in domestic trade. Properly 
employed they are an invaluable means of making 
agency or dealer connections and later on of co- 
operating with such distributors in the building up 
of a consumer or user demand. 

The most suitable circular for the introductory 
work of originating correspondence with prospective 
agents or dealers is a simple but attractive presenta- 
tion of the most novel or popular articles of the line, 
with incidental mention of the rest or some in- 
dication of the standing of the maker and of the 
scope and character of the production facilities back 
of the goods. Bombastic over-statements should be 
avoided. Say what you have to say, simply and 
frankly. 

This circular should be enclosed with a letter 
which places most of its emphasis on the service and 
co-operation the manufacturer plans to extend to all 
who handle his line. There is some difference of 
opinion regarding the efficacy of form letters for 
this purpose, but those who oppose them seem in 
the past to have depended for success on their 
deceptive possibilities rather than upon the char- 

65 



66 AMERICAN METHODS IN FOREIGN TRADE 

acter of their contents. Their indisputable effective- 
ness is seldom if ever due to their delusive qualities, 
but to the fact that they are interesting to the man 
who gets them. Printed forms masquerading as per- 
sonal, individual communications have seldom mis- 
led intelligent business men. When they read them, 
they do so because the message conveyed comes to 
them in a familiar and easily comprehended guise. 
Men are creatures of habit. They seldom discard a 
letter of any kind without a glance, for fear it may 
be worth reading. Having looked at a form letter 
they may read it, not as a rule because they are 
tricked into so doing, but because it seems to them 
to deserve attention. 

If prices are mentioned in export circulars, they 
should be list, reserving the quotation of discounts 
for ensuing correspondence. Many export man- 
agers refrain from any mention of them, list or 
net, in their circulars or other forms of general 
advertising, devoting their first efforts exclusively 
to arousing interest in the line. Most salesmen will 
agree that in selling quality goods price should be 
the last thing discussed. 

Some of the more conservative foreign sales 
managers are opposed to the general circularizing 
of prospects for exclusive agencies on the ground 
that what the manufacturer has to offer is thereby 
cheapened in the eyes of the importing houses thus 
addressed. The validity of this objection would 
seem to depend largely on the form of approach 
employed. No business man would argue the ad- 
visability of suddenly deluging a list of foreign 
firms with a definite offer of an exclusive agency 



CIRCULARIZING BY THE BEGINNER 67 

arrangement, but there can be no real objection to 
the use of a general circular presenting the attrac- 
tive features of a line in such a way as to suggest 
to all readers the desirability of representing it 
locally. And there seems to be no reason why in- 
cidental mention that agency applications will be 
considered cannot be made in such a circular. The 
best representative for a given line in any foreign 
market is often a very small needle in a very large 
haystack and it is difficult to understand how all 
the possibilities can be uncovered except by blanket- 
ing the field in a preliminary way. 

The direct exporter should, in the beginning at 
least, circularize commission houses, many of which 
as resident buying agents for foreign firms are on 
the alert for new lines in behalf of their overseas 
clients. Where the general merchandizing plan is 
used, such circularizing should be kept up as long 
as there is a chance that the percentage of returns 
in the form of new foreign connections and the 
strengthening of old ones, will make the investment 
a profitable one. On the other hand, lines that are 
to be sold by the exclusive agency method need not 
perhaps be kept so continuously before these factors 
after fairly adequate foreign representation has 
been secured. 

In approaching export commission houses, the 
same printed circular matter that is sent abroad 
may be used, but it should be accompanied by a 
special letter stating just what work is being done 
direct in foreign markets so that these buying 
agents may be prepared for any interest later mani- 
fested by their clients and may, if they care to, take 



68 AMERICAN METHODS IN FOREIGN TRADE 

the initiative by making an intelligent presentation 
of the matter to those they serve. 

The attitude of the prospective direct exporter 
toward export commission houses should be de- 
termined by the constant realization that they are 
the more or less trusted buying representatives of 
many worth-while foreign firms and, as such, have 
influence with them. As previously pointed out, the 
entirely fair attiude is that of willingness to meet 
the wishes of overseas buyers as to how transactions 
are to be handled. 

Direct mail work should play an important part 
in the campaign for foreign business. Many of our 
most successful exporting manufacturers owe their 
start to intelligent and thorough circularizing com- 
bined with the judicious use of space in export pub- 
lications. Sometimes such beginnings were later 
expanded by the efforts of representatives on the 
ground, but there are noteworthy instances where 
gradually and at little expense, all of the markets 
of the world have been developed chiefly, if not en- 
tirely, by persistent and painstaking circularizing 
and advertising supplemented by careful attention 
to resulting inquiries. It is true that no quick ' ' kill- 
ings^ can thus be made, but under normal condi- 
tions overseas countries are not gold mines where 
rich strikes are to be expected, but rather fields of 
great productive power for those who know how, 
patiently and thoroughly, to sow the seed and cul- 
tivate and gather the ever-ripening harvest. 

Again it should be stated that the value of per- 
sonal representation is unquestioned, but it must 
always yield precedence in importance, first, to 



CIRCULARIZING BY THE BEGINNER 69 

soundness of policy and second, to the ability with 
which that policy is carried out in the home office. 
Manufacturers often expect to accomplish too much 
by merely sending salesmen abroad with catalogs 
and samples, forgetting that what the foreign buyer 
wants is not merely good merchandise at fair prices, 
but permanent and reliable sources of supply for 
such goods. 



CHAPTER XIV 

EXPORT PUBLICATIONS AND THE BE- 
GINNER IN DIRECT EXPORTING 

Theee are two kinds of journals published in 
the United States for foreign distribution. The 
largest class comprises those of general circulation 
among wholesale importers, companies engaged in 
mining, the operation of public utilities and the 
management of large private enterprises, the 
more important retailers — in short, among all those 
who do business in foreign markets on a sufficiently 
large scale to make it profitable for them to import 
either for resale or for their own needs. 

The second class consists of publications each of 
which is designed to interest a certain class of 
readers, such as planters, druggists, shoe retailers, 
automobile dealers, etc., more or less without regard 
to their direct buying power, but rather with the 
idea of influencing through them the purchases 
made by importing distributors. 

Each of these has its sphere of usefulness, but 
unless the line to be sold is one whose unit is large 
enough to make single initial sales worth while, the 
general export publication is best for the beginner 
who is looking for exclusive agents, dealer connec- 
tions or initial orders from users whose needs are 
sufficiently large to warrant direct buying. 

70 



EXPORT PUBLICATIONS 71 

At first glance it might seem to the uninitiated 
that the use of a publication purporting to reach 
only those who are known to be interested in his 
line would involve less waste in circulation and give 
quicker results. Many have been led astray by this 
assumption. 

Generally speaking, the foreign firm whose ac- 
tivity in any one branch of trade is sufficient to 
attract the attention of an American publisher of 
a paper devoted to that line alone, is not a good 
prospect for makers of those goods who are trying 
to get a foothold in overseas markets. The very ac- 
tivity which the publisher notes is a sure indication 
that such a foreign firm has made connections with 
satisfactory sources of supply in this or other coun- 
tries and having identified itself with the goods 
produced by certain makers, will not, under normal 
conditions, be quick to make a change. 

In most foreign markets the best prospective im- 
porters of any one line are, for the beginner, those 
firms which have connections with makers of that 
line so unsatisfactory as to prevent them from at- 
tracting much notice; those which, having handled 
allied products successfully, are ready to be shown 
how they can extend; or those which, never having 
handled the line in question, but interested in it by 
noting the success of others, are inclined to devote 
some of their capital and energy to it when an at- 
tractive opportunity comes along. Only the general 
publication, which blankets the field, can claim to sift 
such prospective buyers from the scores of thou- 
sands of importers of manufactured goods. 

The circulation of every important general ex- 



72 AMERICAN METHODS IN FOREIGN TRADE 

port publication is practically all free. A paper, no 
matter how excellent, no matter how valuable from 
the reader's point of view, must be sold like any 
other manufactured article. The difficulty of con- 
ducting at very long range a campaign for paid 
circulation and of collecting the small amounts due 
for each subscription and the renewal thereof, com- 
bined with the recognition of the importance to the 
advertiser of many foreign importing firms who 
might never take the trouble to subscribe, forced on 
the first publishers in this field a certain amount of 
free distribution and gradually made it apparent 
that what is now called "directed circulation" was 
the only practical plan of operation. By this method 
the copies over and above those required to serve 
the small percentage of paid subscribers are sent 
free to carefully selected names of foreign buyers 
with a frequency that varies with the relative im- 
portance of each. In this way hundreds of thou- 
sands of firms are reached each year. 

Some advertisers trained to regard paid circula- 
tion as a sine qua non of publication publicity 
profess on this account to disbelieve in the efficacy 
of export papers. There would be more point to 
this, if it were possible for them to buy a paid cir- 
culation among foreign buyers generally. This they 
cannot do and it must be admitted that any adver- 
tising is good which reaches and interests enough 
of the right people. That export publications do 
this there can be no dispute. 

American manufacturers seeking foreign trade 
need so much in addition to publicity that export 
publishers have found it necessary to maintain for 



EXPORT PUBLICATIONS 73 

their advertisers a supplementary service in the 
translation of correspondence, supplying lists of 
names for circularizing purposes, reporting on the 
standing of foreign firms and helping to solve 
special problems as they arise. This service has 
been so highly developed that it has come to be 
considered one of the most valuable facilities at the 
disposal of the seeker of overseas trade. 

Too much should not be expected of export pub- 
lications. They give the best results only to those 
who know what they are trying to do and who sup- 
plement the publicity their columns afford by cir- 
cularizing and by careful attention to detail in 
handling inquiries. A combination of circularizing 
and the use of representative space in at least one 
and preferably two export journals is very 
likely to get the attention of the right men at the 
right time and usually constitutes a sound campaign 
for the beginner. 

The reputations of export papers have in the past 
suffered severely at the hands of manufacturers, 
who without having formulated a sales policy, 
assigned a competent person to take charge of the 
work, or planned any supplementary circularizing, 
have nevertheless made a contract for space in one 
or more publications and then waited for business 
to develop. The capacious lower right-hand drawer 
of the sales manager's desk in many an American 
factory organization is filled to overflowing with 
neglected or mishandled foreign correspondence, 
some of it with importing firms who could buy the 
factory, good will and all, without serious financial 
extension, and most of it worthy of careful atten- 



74 AMERICAN METHODS IN FOREIGN TRADE 

tion. To look over the mass would make any good 
export man weep for the lost opportunities it 
represents, if his first feeling were not annoyance 
for the harm done those who, in their future efforts 
to get a foothold in foreign markets, must first con- 
vince foreign buyers that they are not like other 
American manufacturers of their acquaintance. 

The complaints of poor packing, lack of attention 
to detail and what not that emanate from visiting 
foreigners, returned tourists and American consuls 
and are repeated ad nauseam by the press and by 
speakers at foreign trade conventions, are not char- 
acteristics of American exporters, but originate in 
the attempts. of foreign buyers to do business with 
non-exporting manufacturers who expect trade to 
be handed them for the asking or to be' won for 
them by the fruition of some much-advertised 
scheme for removing the obstacles which are sup- 
posed to keep foreign orders from flooding their 
mail. It is the manufacturer who is willing to do 
everything to get foreign trade except work hard 
for business and handle it properly when he gets it, 
that inspires all the unfavorable comment. 

In the meantime the skillful, hardworking builder 
of foreign distribution and good will receives little 
attention. " There is no news in being good," says 
Mr. Dooley. From the point of view of the general 
public this is true, but it is time for those Ameri- 
cans who are really interested in foreign trade to 
stop listening to warnings as to what not to do and 
find out how their manufacturing neighbors, the best 
exporters in the world, have built up a world-wide 
demand for their products. 



CHAPTER XV 
THE EXPORT CATALOG 

The export catalog is one of the stumbling blocks 
of the beginner in direct exporting. There is no 
good reason for this except a provincial disposition 
to regard other peoples from our own point of view 
and a lack of realization that big worth-while things 
do not spring into being over night. 

No matter how complete your line, how wide the 
range of your products, do not regard that ,as the 
all essential thing to be demonstrated. Do not gag 
a prospective' overseas buyer by trying to ram all 
your products down his throat at the start. Rather 
use some of them as appetizers. Foreign importers 
are not primarily concerned with your products. 
They can probably get them from many sources. 
Their first interest in you is as a possible source 
of supply for goods which are or may be in demand 
in their community. 

Do not think that, because a competitor, who is an 
experienced exporter, has a very elaborate and 
voluminous catalog, you must imitate it. You must 
creep before you walk. There are many buyers that 
the rival maker does not sell because they do not 
like him or his methods, because he has overlooked 
or neglected them or because for some reason, such 
as proximity to an old customer, he does not con- 
sider it advisable to sell them. Keep your confi- 

75 



76 AMERICAN METHODS IN FOREIGN TRADE 

dence in your own goods and policy, disregard com- 
petition and go out and make a start. 

Do not, therefore, take a bulky domestic catalog 
that is the result of your many years ' experience in 
the home market, translate it into several languages, 
print it at great expense and send it out to a big 
list of possible foreign customers. 

Put yourself in the other man's place and try to 
imagine which of your many products will most ap- 
peal to him. Get advice, by all means, as much as you 
can of it, but do not be guided by it alone. You 
make the goods and have sold them to human beings 
who have much in common the world over. Listen 
to what others say but put it to the acid test of 
,your own special knowledge of your own line. 
Never eliminate your own business experience as a 
factor in formulating your export selling policy. 
If you find something in this book that does not 
harmonize with what you have learned by hard 
knocks, throw it out. Even if it is right, it is prob- 
ably useless to you because you will not carry it 
out sympathetically. , 

Do not jump at the opposite conclusion that your 
first export catalog can consist of some leaflets de- 
scribing a few leaders and signed " Yours very 
truly.' ' By all means give the reader a line on the 
range of your production, the excellence of your 
fabricating facilities, the care you exercise, the skill 
of your workmen and everything else that has any 
bearing on your desirability as a source of supply. 
The point is that you need not or rather ought 
not to start with an export catalog that illustrates 
and describes, in great detail, every product and 



THE EXPORT CATALOG 77 

every repair or replacement part that yon make. It 
is all right to do that for "the trade" at home but 
wait till you have a trade abroad to do it for and 
you will then have learned enough to do it intelli- 
gently. 

Quote only list prices in your catalog, reserving 
discounts to be given in correspondence or by en- 
closure of separate discount lists. Some exporting 
manufacturers quote both prices and discounts 
separately. What you make and how you propose 
to sell it must decide such questions. 

Give the equivalents in the metric system of all 
weights and dimensions that appear in the English 
system. Where extreme accuracy is important, 
carry out the decimals four places if necessary. 
Where it is not, two places will suffice. 

Describe just how your goods are usually packed 
for export, giving the weight and dimensions of each 
unit, the number of units per package, box, crate 
or bale, the gross and net weights and any other 
information that may be necessary to satisfy cus- 
toms requirements. To determine these matters, 
consult with freight forwarders and other service 
organizations and with the consuls of the different 
countries in the United States. 

Write the copy for your English export catalog 
in the plainest and simplest language possible. 
Avoid technicalities and the patter of your craft. 
Many trade terms which are current in the United 
States are unintelligible in other English-speaking 
countries. If you have lived so long in the atmos- 
phere of your line that you cannot describe it in 
everyday, universally understandable English, do 



78 AMERICAN METHODS IN FOREIGN TRADE 

the best yon can and then call in an advertising 
man who knows nothing of yonr business and say : 

' ' Here is our version of onr export catalog. It 
expresses what we want to say. Go over it and if you 
find anything that you think may be obscure to 
New Zealanders or South Africans, come to me and 
I'll explain it so that you can make it clear. If 
you find it desirable to leave technical terms as we 
have them and they cannot be found in any ordinary 
dictionary, do not hesitate to use as many and as 
voluminous footnotes as you deem necessary." 

If you will do. this it will improve your catalog. 
The man who might have understood it all anyhow 
will comprehend and appreciate your thoroughness 
and the man who might not have grasped the mean- 
ing of everything will be delighted by your effort 
to make all things plain. 

Particularly is this plan to be recommended where 
the original is to be translated into a foreign 
language. Many alien tongues are not as rich as 
English in technical terms and when they have the 
exact equivalents, the translator may not know it 
if the original is not clear. Always remember that 
only ideas are translatable. Words have their 
equivalents but stringing equivalents together is no 
true translation at all though it may result in what 
is sometimes called a "good literal translation' ' 
which signifies about what we mean when we say 
that a foreigner expresses himself in fairly clear but 
broken English. Every idea contained in the 
original must be thoroughly understood by a trans- 
lator who has the ability to express himself in his 



THE EXPORT CATALOG 79 

language reasonably well, in order to give yon an 
effective foreign catalog. 

It is very discouraging to a foreign buyer to get 
in touch with a source of supply whose line and 
policy seem right, and then find, when he undertakes 
a thorough study of it as described in a catalog 
that is obviously intended for his use, that after 
sailing along smoothly for a time, he runs head on 
into an immovable mass of jagged words — a jargon 
that is all the more exasperating because it seems 
to mean something but the significance of which 
eludes the most painstaking effort to grasp it. Do 
not expect such buyers to write you for explanations. 
Foresee these difficulties and steer clear of them. 

As you progress in the forming of foreign con- 
nections you will learn much that will enable you 
to improve and enlarge your catalog. The better 
the start, the quicker your advance and when you 
arrive at the point where you are sending out in 
various languages an imposing printed presentation 
of your line and policy, it will be a great asset to 
you for it will be the product of your own activities 
and not a crude and palpable imitation of what 
someone else is doing. 



CHAPTER XVI 
AMERICAN SALESMEN IN FOREIGN TRADE 

Foe years we have heard much about the com- 
mercial representatives who, with over-praised 
German efficiency, are trained from early youth for 
service either as itinerant salesmen or resident 
agents in overseas markets. We have been told 
that before we can compete with Germany in world 
trade young Americans must learn several lan- 
guages and otherwise equip themselves by special 
courses of study to spend their lives traveling about 
the world or to marry into good families in foreign 
countries and settle down there to a happy life as 
ambassadors of our industrial interests. 

If our future as an exporting nation depends upon 
our persuading thousands of able young Americans 
thus to expatriate themselves or dedicate them- 
selves to a wandering existence in remote corners 
of the world, the outlook is indeed gloomy. For- 
tunately, however, our self-appointed export ad- 
visers have as usual, in their adherence to a theory, 
overlooked the very important fact that for years 
before the War we did compete very successfully 
with Germany without satisfying this supposed re- 
quirement to any considerable extent. 

There are no set rules for success in business. One 
man may triumph by methods which would spell 

80 



AMERICAN SALESMEN IN FOREIGN TRADE 81 

failure for another. Each must work along the lines 
best suited to his temperament and the conditions 
which environ him. The pioneering American 
manufacturer, unable to find or train for himself 
any considerable number of high class overseas 
salesmen, adapted to his needs the materials that 
he found ready at hand, as will be seen later on. 

Young Germans did not deliberately choose to 
dedicate themselves to a nomadic existence or to 
exile in a foreign country when they might have 
found as good or better opportunities at home. 
It is doubtful if they could have been, persuaded 
to take this course under such circumstances. The 
fact is that the fatherland was overcrowded and 
far-seeing political and industrial leaders simply 
turned to their own advantage the exodus that was 
therefore inevitable by making it possible for the 
more adventurous spirits to foresee a greater future 
in selling goods abroad than in emigrating in 
search of opportunity and eventually renouncing 
their citizenship as so many of former generations 
did. The "Dual Allegiance' ' of which we heard so 
much in the early years of the great war, was in its 
economic aspects part and parcel of this more or 
less successful plan, though it undoubtedly had 
political objects of equal or greater importance. 
Thus was necessity made a virtue and a prospective 
loss turned into an asset, but this would not have 
been possible in any country in which economic 
conditions did not cause its young men to look to 
other lands for their life opportunity. 

Until such conditions exist and are similarly 
utilized in the United States it is doubtful if we 



82 AMERICAN METHODS IN FOREIGN TRADE 

will ever have an adequate supply of native-born 
and specially trained Americans as foreign trade 
salesmen. May the flower of our youth ever find 
great opportunities without leaving the land of their 
birth and severing home ties for all time. 

Fortunately, however, there are always more ways 
than one to accomplish any given business purpose. 
Let us see how American manufacturers have given 
the rest of the world its most dreaded competition 
in world markets practically without the use of 
trained salesmen attached to their home office and 
without the local co-operation of American business 
men resident in foreign countries. 

In the first place, in that large proportion of lines 
which have found the exclusive agency plan of ad- 
vantage, the manufacturer has no need of salesmen 
in the ordinary sense. The whole problem is placed 
squarely on the shoulders of resident agents who 
act as sales managers for their territory. These 
representatives themselves may be English, French, 
Italian, Spanish or of other nationalities. They may 
or may not be natives of the countries in which 
they do business. Many of the best South American 
agents for American lines were, previous to 1914, 
German or of German descent. The men employed 
by them were of many different extractions but 
usually they were born and educated in the country 
in which they worked. 

Ordinarily it matters little to the American manu- 
facturer what blood flows through the veins of his 
agents or of the men whom the latter employ to do 
the intensive selling work for them. He is only 
concerned with their standing, with their ability to 



AMERICAN SALESMEN IN FOREIGN TRADE 83 

interpret the spirit of his organization and with the 
results they obtain. 

Eight here it may be well to correct a widespread 
misapprehension regarding the influence of national 
feeling on international trade. There seems to be 
an impression that the Englishman gives the 
preference to British goods, the Frenchman to the 
products of the factories of his home country and 
so on. Experienced export men will testify that in 
practice they encounter very little patriotic preju- 
dice of this kind. The first consideration of busi- 
ness men everywhere is the assurance of continued 
and increasing profit and, quite regardless of the 
country of origin, they usually buy or represent 
the lines of goods that in their judgment are the best 
for their territory. English, French, Italian and 
even German firms have frequently handled Ameri- 
can products to the virtual exclusion of goods made 
in their own home lands. 

This, it may be remarked in passing, is the chief 
reason why a national trade mark, applied indis- 
criminately to all goods made in a given country, is 
useless. Under normal conditions, free from the 
violent prejudice engendered by war, agents and 
dealers are principally concerned with their con- 
tinued profit and users are chiefly interested in the 
suitability to their needs of the goods or articles 
purchased. Where they are made matters little. 
How well made and fairly priced they are is very 
important and in no country is a high standard of 
quality consistently maintained by all makers in all 
lines. 

In this connection also it may also be well to con- 



84 AMERICAN METHODS IN FOREIGN TRADE 

sider how practical are the theories regarding the 
value to manufacturers of fostering a so-called 
"American atmosphere" in overseas markets. 
There is no question that the better foreign business 
men know us and our methods, the closer will be 
our commercial relations, but in view of the mani- 
fest difficulty of making it attractive for large 
numbers of American citizens to settle down and 
form colonies in the large trade centers of our 
principal overseas markets, is it not at present more 
feasible for our individual manufacturers to go on 
creating American atmosphere in the offices of the 
firms they do business with in the way that they 
have in the past, that is, by forming practical busi- 
ness friendships and seeing to it that these relations 
become permanent? 

To return to the question of salesmen, the only 
necessary traveling by direct representatives of 
manufacturers who use the exclusive agency plan 
consists of trips for appointing agents and for over- 
seeing their work in a spirit of co-operation. Such 
journeys are always made by the export manager 
or an assistant and do not involve continuous ab- 
sence from the United States for long periods. They 
are or may be alternated with intervals of work in 
the home office where the plans for co-operation 
originated by such visits, must be developed. 
Thus the exclusive agency plan practically elim- 
inates the need of employment by the manufacturer 
of what are ordinarily called traveling salesmen. 

Those who use the general merchandizing plan 
of foreign trade building obviously have no one to 
relieve them of the necessity of maintaining a staff 



AMERICAN SALESMEN IN FOREIGN TRADE 85 

of traveling salesmen. Usually a start is first made 
by a well-planned and carefully executed campaign 
of circularizing and advertising with painstaking 
attention to the correspondence thus developed. 

As the business grows the export manager is con- 
fronted with the necessity of cultivating the field 
more intensively by the employment of salesmen. 
Some have solved it in the nearer countries by 
training young Americans with a knowledge of the 
necessary foreign language (usually Spanish) to 
cover these markets from the home office while 
others, seeing the difficulty and almost prohibitive 
expense involved in this line of procedure if car- 
ried out in the more distant countries, have adopted 
the plan of appointing in each territory a resident 
manufacturer's agent with experience in allied lines 
and consequent acquaintance with the trade. 

These resident selling representatives should not 
be confused with exclusive agents who, as has been 
stated, act to all intents and purposes as managers 
of factory branches. The selling agent now re- 
ferred to also has his own territory and is interested 
in all business secured there, but here the resem- 
blance ends, for his compensation is a salesman's 
commission (usually 10% or less), he carries no 
stock, takes orders only for the account of the manu- 
facturer, assists in making collections and adjusting 
complaints and in general does for the factory or- 
ganization exactly what any traveling salesman is 
supposed to do for his firm. 

Such selling agents, in consideration of a com- 
mission to be paid on all orders or collections from 
their territory, agree to travel it, in person or 



86 AMERICAN METHODS IN FOREIGN TRADE 

through associates, and use their best efforts, in 
harmony with those of the manufacturer, to secure 
business. They are seldom importers on their own 
account, as this would place them in direct com- 
petition with some of their best customers, the 
commission on whose orders is worth more than the 
possible profit on goods the salesmen themselves 
might import. 

If the manufacturer who adopts this plan will 
select his selling agents with the care and delibera- 
tion which he exercises when taking on domestic 
salesmen, it is quite possible to build up an effective 
organization in all important foreign markets. 
Here again nationality is of minor importance, the 
chief considerations being character and ability. 
As the question of credit is all on the manufacturer's 
side, little inquiry as to the financial standing of 
applicants is necessary beyond ascertaining that 
they are able to assume the risk of conducting their 
selling efforts until sufficient business is developed 
to make them self-supporting. In some cases 
where otherwise well qualified men are unable to 
finance the introductory work, it has been found ad- 
vantageous to make certain monthly or quarterly 
advances to cover expenses until such time as they 
may gradually be deducted from commission checks. 

Negotiations with such selling agents may be 
opened by circularizing, by advertising in export 
publications or by a personal canvass of the various 
trade centers on the part of a representative of the 
manufacturer. Unless the circumstances are un- 
usually convincing it is customary to make only 
tentative arrangements, especially if the maker 



AMERICAN SALESMEN IN FOREIGN TRADE 87 

already has by his own unaided efforts developed 
a considerable volume of business in the territory. 
These and other precautions will occur readily to 
any ordinarily good business man. 

The selling agent has one decided advantage over 
the salesman sent out from the manufacturer's home 
office. He has local standing, social and commer- 
cial, and knows his territory. If his previous busi- 
ness experience has been in allied lines, his personal 
acquaintance with individual importing whole- 
salers and retailers may quickly develop business 
which it would take a stranger months, perhaps 
even years, to secure. His disadvantage is that he 
may lack special training in selling any given prod- 
uct but this the good export manager will soon 
remedy. Many such agents visit the factories they 
represent regularly and consider themselves as 
much a part of their sales organizations as do the 
senior domestic salesmen. 

A few of our exporters are experimenting with 
a plan by which carefully selected young natives 
of other countries are brought to the United States 
on a nominal salary and are given a thorough train- 
ing at the home office under the watchful eye of 
the foreign sales manager. One pronounced success 
among many partial or complete failures will fully 
compensate such expenditure of time and money. 
Enough has already been accomplished along these 
lines to demonstrate the value of the plan if capably 
carried out. 

Thus have American manufacturers solved the 
problem of adequate sales representation in foreign 
markets. There is nothing to prevent others from 



88 AMERICAN METHODS IN FOREIGN TRADE 

follov/ing in their footsteps if they will formulate 
a sound policy and then work it out patiently and 
with due regard for the interests of all whom these 
activities bring into association with them. 



*• 



CHAPTER XVn 

CO-OPERATING WITH FOREIGN AGENTS 
AND DEALERS 

One of the characteristics that distinguishes the 
work of American manufacturers in foreign markets 
from that of their European and especially their 
German competitors is the intelligent interest they 
take in the welfare of their agents or dealers and 
in seeing that their products give satisfaction to 
the user. There is nothing new or original in this, 
for with us it is the accepted thing in domestic selling, 
but few American executives realize how far we are 
in advance of the rest of the world in this respect. 
The refinements of dealer co-operation are so dis- 
tinctively American that when introduced into 
overseas selling and patiently and thoroughly car- 
ried out, they have placed our manufacturers in a 
position to disregard competition. Again the reader 
is reminded that the best American export methods 
are but adaptations of those that are used at home 
as a matter of course, yet the results they have 
given abroad led observant German consuls, as far 
back as 1905, to voice many warnings from their 
posts in South America and elsewhere. 

There is virtually nothing that we have worked 
out along these lines that, suitably modified, is not 
applicable to conditions in all foreign markets. 

89 



90 AMERICAN METHODS IN FOREIGN TRADE 

Under the exclusive agency plan the export man- 
ager or his trained assistants frequently takes 
charge on the ground of training the men whom 
sales representatives have selected. Skilled demon- 
strators and repair men are sometimes sent out to 
become temporarily identified with agents' organ- 
izations till such time as others become sufficiently 
acquainted with the line to take their places. 
Eepresentatives are encouraged to visit the home 
factory to further cement the business relation- 
ship, to study selling methods and to carry back 
with them that degree of confidence and enthusiasm 
which only results from an intimate acquaintance 
with the organization behind the product and the 
care with which it is made. 

Agents are not only encouraged but shown how 
to circularize their market. Ordinarily the circu- 
lars to be used are prepared by the export manager 
in collaboration with the advertising department, 
submitted to the foreign representative for sugges- 
tions and, when satisfactory in form, are supplied 
by the manufacturer to the agent, mailed out direct 
or both. Lists to be circularized, compiled by ex- 
port publications or service organizations of various 
kinds, may be submitted to agents for cross check- 
ing or to be supplemented with the names of buyers 
as yet unknown in this country. Circulars are 
usually sent out over the names of the manufacturer 
coupled with that of the agent as local sales repre- 
sentative. 

Under the general merchandizing plan, many 
forms of dealer co-operation are possible. Here, too, 
circularizing and the supplying of printed matter 



CO-OPERATING WITH FOREIGN AGENTS 91 

for store distribution play an important role. 
Sampling and demonstrating campaigns are fre- 
quently very much worth while. Suggestions for 
window displays and supplying display devices, 
hangers, posters and electrotypes have all been 
found helpful. The manufacturer should always 
keep in mind the fact that in but few if any foreign 
markets has scientific merchandizing been devel- 
oped to the extent that it has in this country. By 
fully acquainting himself with the methods overseas 
dealers are using and the conditions under which 
they are working, it may frequently be possible to 
make better merchants of them by tactfully sug- 
gesting the use of plans and equipment with which 
the manufacturer's experience in domestic selling 
work has made him so familiar that he sometimes 
forgets that everyone else does not know about them. 

Some of our exporting manufacturers keep a file 
of exterior and interior views of their foreign cus- 
tomers' establishments together with all obtainable 
data regarding their circumstances and methods 
solely as a guide to intelligent co-operation. There 
are instances where they have with excellent results 
advised the use of special store equipment coupled 
with estimates and the offer to purchase and ship 
on the merchant's order. 

Not a little can be accomplished by the manu- 
facturer's constituting himself a source of informa- 
tion and advice regarding lines of goods made in 
the United States. Foreign dealers who, as before 
stated, want to know a great deal not only about 
the goods they handle, but also about the organiza- 
tions back of them, often experience great difficulty 



92 AMERICAN METHODS IN FOREIGN TRADE 

in attaining the intimate knowledge that they require 
before stocking a new line or accepting a substitute 
for one previously carried. To supply this means 
some investment of time and money, but it is almost 
invariably profitable, directly or indirectly. In 
territories where the manufacturer has a sales 
representative, all assistance extended to dealers 
should of course be with the co-operation of this 
salesman who may be kept advised of the status 
of each account by copies of letters received and the 
answers thereto and by frequent direct communica- 
tions from the home office. 

Generally speaking, lines for which general pub- 
lication advertising is beneficial at home, must, to 
achieve the greatest possible results in foreign 
markets, receive the benefit of similar publicity. 
The importance of this subject is, however, so great 
that it will be given a chapter by itself. 

The good exporting manufacturer carries into 
foreign markets that conscientious regard for the 
ultimate user that has done so much to build up 
good will for him at home. Till the consumer, that 
most important factor in trade, is not only satisfied 
and comes back for more, but also goes out of his 
way to tell others of his gratification, foreign selling 
has not been developed to its highest possibilities. 
The ways in which this can be accomplished, pro- 
vided of course that the goods are right, are 
numerous and familiar to all good sales managers. 
Special mention may, however, be made of the guar- 
antee tag authorizing the dealer to replace at the 
expense of the manufacturer any article whic^ in 
his judgment has within a given period of time been 



CO-OPERATING WITH FOREIGN AGENTS 93 

found defective in quality or workmanship. Such 
tags, printed in the dealer's language and attached 
to samples, accompanied by a statement that all 
goods ordered would be so guaranteed, have fre- 
quently led dealers to stock lines of higher first 
cost, when in no other way could they have been 
so quickly convinced by the manufacturer's claims 
of superiority. 

Another distinguishing mark of the good export- 
ing manufacturer is his manner of handling com- 
plaints from overseas importers. The doctrine that 
the customer is always right may sometimes work 
injustice or hardship, but if any foreign agent 
or dealer whose standing is unquestioned and 
whose good will is therefore a great asset, cannot 
readily and tactfully be convinced that his claim 
is an unjust one, it is better to satisfy it in full. 
Avoid lengthy squabbles and partial agreements. 
Do not try to make the other man meet you half way 
if he thinks that you should go the whole distance. 
Rather put him under obligations than let him feel 
that you have taken the slightest advantage of him. 
Forget the immediate dollar and keep your eye on 
the hundreds and thousands that he will make for 
you. It pays. 

All this may seem to the reader to make the road 
to export success a difficult one, but the carrying out 
of all the suggested lines of thought and action 
must of course be a development. In the beginning 
the manufacturer, with a full realization of the 
value to him of foreign markets, with faith in his 
product, and having in mind a definite selling plan 
should enter the field determined to bring home to 



94 AMERICAN METHODS IN FOREIGN TRADE 

distributors and users alike, the fullest possible 
realization of what he has to offer and of the ex- 
cellence of his intentions. In doing this, if he will 
remember his domestic experience and keep in mind 
the fact that human nature is much the same the 
world over, all the rest will come easily and 
naturally. 



CHAPTER XVIII 

GENERAL PUBLICATION PUBLICITY IN 
FOREIGN MARKETS 

Manufactueees who have found general advertis- 
ing to be essential to the complete success of their 
sales efforts in the home market should also use 
such publicity in building up foreign distribution, 
especially in the more important countries. 

There is some difference of opinion as to the best 
way to handle general publicity abroad. Many 
manufacturers whose overseas business has been 
built up on the exclusive agency basis have left the 
details of each local advertising campaign almost 
if not entirely in the hands of their resident repre- 
sentatives. In such cases the agent may set aside 
a percentage of his total sales, the manufacturer 
contributing an equal amount, or the latter may bear 
the entire expense involved. This appropriation the 
agent may place as he sees fit, contracting either 
direct with publishers or through local advertising 
organizations. 

Sometimes when the amount involved is large and 
is appropriated almost entirely by the manufac- 
turer, the latter stipulates that the final schedules 
and plans must be looked over and approved by 
his export and advertising departments. In much 
the same way exporters who use the general mer- 

95 



96 AMERICAN METHODS IN FOREIGN TRADE 

chandizing method sometimes put their publicity 
campaigns in the hands of their local salesmen. 
Occasionally the manufacturer makes direct ar- 
rangements with advertising agents in each market, 
who supposedly work in harmony with sales repre- 
sentatives on the ground. 

All these plans have the advantage of relieving 
the home office of much detail work, but, in this as 
in other matters, the greatest success does not come 
to the man who gives too much importance to such 
a consideration. Generally speaking, the more 
closely identified the manufacturer is with the 
efforts made to stimulate a demand for his product, 
the better the result in the long run. 

In no country has the use of publicity attained 
the degree of effectiveness that it has in the United 
States. It is only necessary to look over the columns 
of the best publications issued in other parts of the 
world to make this fact readily apparent. This 
being so, it follows that foreign sales and adver- 
tising agents, no matter how high their standing, 
how great their knowledge of local conditions or 
how high their ability in every respect, can hardly 
be qualified to obtain for an American manufac- 
turer the greatest possible results in the handling 
of general publicity. However painstaking may be 
the supervision of their efforts exercised by the 
home office, there is a point beyond which the most 
diplomatic critic cannot go under the circumstances, 
and the result is usually a compromise that is un- 
satisfactory to all concerned. Sometimes, too, local 
representatives are prejudiced in favor of media 
which, if the facts were at hand, the manufacturer 



GENERAL PUBLICATION PUBLICITY 97 

would regard as unsuitable. Often no satisfactory 
evidence that insertions are made as planned can 
be obtained from abroad by the advertiser. 

As so frequently reiterated in the preceding pages, 
the best export methods are adaptations of those 
found best for each line in the home market and 
this applies with special emphasis to advertising. 

The best plan seems to be that of selecting an 
advertising agent residing in the United States to 
handle all overseas campaigns. There are a number 
cf organizations that confine themselves almost ex- 
clusively to placing advertising abroad and in re- 
cent years some of the large domestic agents have 
developed very efficient foreign departments. These 
firms possess an intimate acquaintance with condi- 
tions and media in foreign markets, have standing 
with local publishers abroad, know how to do busi- 
ness with them, and, most important of all from the 
advertiser's point of view, they are here on the 
ground where they can consult and work with the 
executives of the manufacturer's export and ad- 
vertising departments. They are also in a position 
to insure through their checking departments that 
the plan adopted is being carried out. 

Advertising campaigns, if prepared by such 
agents sufficiently in advance, may be submitted to 
local sales representatives abroad for suggestive 
criticism, thus obtaining the benefit of their ac- 
quaintance with conditions gained by actual selling 
work on the ground. 

There are of course exceptions. The use of 
street-car and out-door advertising in some foreign 



98 AMERICAN METHODS IN FOREIGN TRADE 

cities can probably be handled to better advantage 
by sales representatives or advertising agents lo- 
cated in these centers, though this form of pub- 
licity, effective as it is in some fields, bears so in- 
considerable a relation to the whole subject that 
it is of no great moment to the average exporter. 
Probably each manufacturer, after making a study 
of the circumstances involved, can, by the exercise 
of his own common sense, determine upon a policy 
which, while varying with the conditions surround- 
ing his distribution in each market, will for all 
practical purposes approximate what is theoretic- 
ally best. 

At this point the subject of trademark registra- 
tion deserves attention. No local advertising 
campaign should of course, be initiated without 
obtaining all due protection afforded by the laws of 
each country. In fact, there are a few countries, 
of which Argentine and Cuba are the best known 
and most striking examples, where only priority of 
registration counts and where, therefore, this matter 
should be attended to when the first sales are made 
or at least before the line attracts the attention of 
those who make a practice of preying on manu- 
facturers' ignorance of local laws. 

Trademarks should, of course, invariably be 
registered in the name of the manufacturer. This 
seems elemental, but a surprisingly large number 
of exporters have in the past entrusted the carrying 
out of the necessary formalities to local representa- 
tives or friendly dealers, only to discover, on the 
rupture of business relations, that their trademarks 
were owned by the' latter and that the rights thereto 



GENERAL PUBLICATION PUBLICITY 99 

could only be obtained by those justly entitled to 
them either by long and tedious negotiation or by 
process of law, either of which alternatives has 
usually been found to be expensive. 

There are many large firms of patent and trade- 
mark lawyers that can take care of foreign regis- 
tration and some work along these lines has been 
done by various service organizations operating 
through attorneys located on the ground. 

The manufacturer must be prepared for some dis- 
appointment in the appearance of foreign adver- 
tising media. In few if any countries has the 
printing art been developed to the extent that it has 
in the United States, nor are publication owners ac- 
customed to meet the demand for exact compliance 
with instructions that is taken for granted here. As 
a rule it is better not to entrust composition to the 
foreign publisher no matter how carefully the wishes 
of the advertiser may be indicated. Rather set each 
announcement for the space desired and send only 
electrotypes of it. Also be prepared to overlook 
some variation in the schedule of insertions. 
Foreign publishers are frequently unable to com- 
prehend why you should object to slight changes in 
style of type or why, if space is lacking in the Mon- 
day edition, it is not just as satisfactory from your 
point of view to have an announcement scheduled 
for that day appear on Tuesday. This attitude 
is sincere, however unreasonable it may seem to 
us, and in the absence of media conducted more 
in accordance with our ideas, it is foolish to 
argue about it at long range. This is one of the 
situations that must be accepted as gracefully as 



100 AMERICAN METHODS IN FOREIGN TRADE 

possible wherever it develops, limiting oneself to 
a diplomatic attempt to explain the manufacturer's 
point of view, till such time as a better understand- 
ing of the theory of modern advertising can be 
inculcated. 

Similarly it is often difficult or impossible to ob- 
tain sworn statements or other circulation guaran- 
tees, not necessarily because the figures given are 
widely inaccurate, but because no records are kept 
in readily available form. In such cases the state- 
ments made are estimates and, while probably never 
doing the publisher any injustice, they are not, 
except in very few cases, seriously exaggerated. 

These disadvantages are offset by some com- 
pensations, for it will be found that in markets 
where publishers are so little acquainted with 
modern advertising methods, they attribute much 
less value to their space and are therefore inclined 
to offer it at rates much lower than we are accus- 
tomed to pay for publicity in similar media of the 
same circulation at home. 

The publication business in many foreign lands 
is still at the stage of development that it was in 
this country not so many decades ago, when the 
chief source of income was circulation and adver- 
tising was regarded as a by-product out of which 
the publisher got what he could without too much 
expense or inconvenience. This does not make the 
space any less valuable, but for his own peace of 
mind the exporting manufacturer who contemplates 
using it should have an adequate realization of the 
situation. 



CHAPTER XIX 
FOREIGN CREDITS 

Are foreign credits safe f This question has been 
frequently asked and a great deal of affirmative 
evidence has been offered by experienced export 
managers. Yet in these discussions this basic fact, 
which seems to dispose of the question finally, has 
usually been overlooked. 

Normal commercial exchange everywhere rests on 
credit. If the character and financial condition of 
any considerable percentage of the business men 
of any land were such that they could not be relied 
on to meet their obligations, then the commerce of 
that country could never develop beyond the primi- 
tive stage. 

Credit can therefore be safely extended anywhere 
in the world where trade conditions have advanced 
any considerable distance beyond the barter basis, 
if the same care is exercised as in domestic transac- 
tions. But can due discretion be employed without 
the investment of too much time and money! 

This question is answered by the fact that hun- 
dreds of American manufacturers have done and 
are doing it. The necessary information is on file 
with service organizations or export publishers, or 
it can be obtained by them at a cost that is not 
excessive considering the fact that the average size 
of export orders is much larger than in domestic 

101 



102 AMERICAN METHODS IN FOREIGN TRADE 

trade because the foreign merchant must, as else- 
where shown, be much more forehanded and import 
in quantity. 

The export manager can obtain much credit in- 
formation for himself by encouraging prospective 
buyers to make it possible to investigate their stand- 
ing. They may be induced to accompany their first 
orders by letters from local banks or refer to 
other manufacturers with whom they have credit. 
Our established exporters are almost invariably 
glad to assist their foreign customers and fellow 
manufacturers by responding freely and frankly to 
all inquiries regarding the standing of firms with 
which they do business. 

Can an exporter realize anything like the full 
possibilities of a foreign market without extending 
credit? In most lines, emphatically, no. In the first 
place, until the relations of a manufacturer with a 
foreign customer have progressed to the point 
where the assumption of warranted risk is taken as 
a matter of course, there cannot exist that degree 
of close co-operation which is so essential to the 
highest development of distribution. It does not 
matter how assiduously the good will of the merchant 
is cultivated if these efforts are marred by a per- 
sistent refusal to grant the accommodation to which 
he is entitled. Such a stand is justly taken as evi- 
dence of narrowness of vision or lack of confidence, 
either of which is certain to be looked upon as an 
undesirable characteristic in a house that seeks to 
be regarded as a permanent source of supply. 

There is an economic reason also. A merchant's 
capacity to do business is measured by his ability, 



FOREIGN CREDITS 103 

capital and credit. The first two no one can take 
away from him, but with them alone he is handi- 
capped. An important function of credit is the 
multiplication of the usefulness of capital and the 
manufacturer who insists on demanding cash where 
accommodation is customary and warranted, not 
only automatically limits his own opportunity to do 
business, but deprives his customer of a right which 
he has earned and which is just as real an asset as 
his cash on hand. To refuse to extend credit wher- 
ever it is justified is an economic injury to the seller 
and is both an economic and moral injustice to the 
buyer. 

There are exceptions to every rule. In distribu- 
ting some products, such as automobiles, the exten- 
sion of credit is not customary and is not therefore 
usually expected, but it may well be doubted 
whether manufacturers who have sufficient capital 
to do so, are not depriving themselves of a great 
advantage by not departing from the accepted 
procedure in their line. Export commission houses 
accept risks on all kinds of goods and "What man 
has done, man may do." 

In other lines, such as heavy machinery built to 
specifications, some part of the selling price is ex- 
acted in advance, any balance due being collected 
by draft, shipping documents being deliverable on 
payment thereof. Sometimes advance liquidation of 
the whole amount is required, but if the standing of 
the buyer is good, there is little chance that, where 
from 25 to 50% of the total cost has been paid, the 
balance will not be forthcoming in order to obtain 
the shipment. 



104 AMERICAN METHODS IN FOREIGN TRADE 

Foreign credits are much easier to pass on than 
are those that must be considered in the home field 
for the reason that only firms of considerable size 
who can import profitably are entitled to or expect 
to be granted time in which to meet their obliga- 
tions. Most overseas buyers are, from the manufac- 
turer's viewpoint, either good or bad. There is no 
large class of doubtful risks which is the bane of 
the domestic credit department. 

Foreign importers of standing realize that their 
good name is one of their greatest assets which, once 
impaired, is, on account of their prominence and 
the long range at which they must do business 
across frontiers and language barriers, very difficult 
to reestablish. They are therefore extremely jeal- 
ous of it. There are instances where manufac- 
turers of known standing have by mistake drawn on 
overseas customers for large amounts not due them 
and the drawees have paid in full without hesita- 
tion, leaving the adjustment of the matter to cor- 
respondence, rather than allow a draft made by a 
source of supply known to their bank to go back 
dishonored. Such cases are accidental and perhaps 
extreme, but they illustrate the disposition of 
foreign buyers generally. 

American credit managers who sidestep the op- 
portunity to pass on foreign risks, lose the benefit 
of a very broadening influence with the consequent 
limitation of their own usefulness and progress 
and of the future of their firms. To many of our 
credit men, the thought of allowing good mer- 
chandise to go across the seas where the arm of our 
domestic collection laws is powerless to reach, is 



FOREIGN CREDITS 105 

little short of appalling. If they will but shake off 
their provincialism and, realizing that human na- 
ture is universal and that business honor is not 
the exclusive attribute of any one race, gradually 
familiarize themselves with existing facilities for 
obtaining information, they can make a conserva- 
tive start in the extension of foreign credits with 
no loss of sleep. As for collection laws, there are, 
as previously stated, few doubtful foreign risks and 
little is to be gained by litigation of the remarkably 
small percentage of accounts that go bad when 
sound judgment is used. For the universal testi- 
mony of export managers is that a smaller propor- 
tion of bad debts are crossed off the books by the 
export department than are charged against the 
activities of the domestic sales department. 

The form in which credit is extended abroad 
varies with the line and the locality. The open 
account is rightly frowned upon but cannot always 
be avoided where it is customary. It is the policy 
of American export managers to restrict this form 
of credit as much as possible without interfering 
too seriously with the growth of their business. The 
preferred method is the documentary time draft 
drawn at 60 or 90 days sight, on accepting which 
the necessary papers enabling the consignee to ob- 
tain the shipment are released. The accepted draft 
fixes a definite date of payment, and with its various 
endorsements constitutes a trade acceptance which 
is a credit instrument of flexibility, passing readily 
from hand to hand till paid. 

Such drafts, to be most acceptable from the view- 
point of the international banker, should be drawn 



106 AMERICAN METHODS IN FOREIGN TRADE 

on the consignee or his agent, in favor of the drawer 
and endorsed by the latter in blank. Frequently it 
is arranged that they draw interest until paid and 
that collection charges are to be borne by the 
drawee, this understanding being indicated by writ- 
ing in red ink on the face of the draft after the 
amount for which it is drawn, the clause " Interest 
and collection charges added.' ' Bills thus drawn 
are ordinarily salable at par in the New York or 
other foreign exchange markets, recourse being had 
on the drawer in case the drawee fails to pay. 

The subject of foreign exchange is too involved 
to discuss in this volume. How and why the buying 
and selling of foreign drafts yields a profit to those 
engaged in it without loss or injustice to either the 
drawer or the drawee is interesting but of no imme- 
diate concern to the beginner in overseas trade. 
The one illuminating fact for him to keep in mind 
is that the exchange market serves the inter- 
national traders of all countries in the same way 
that a clearing house benefits its member banks. It 
ordinarily makes it possible to balance up import 
and export transactions against each other with lit- 
tle or no exchange of gold between countries whose 
reciprocal sales and purchases are thus in the long 
run made to offset each other directly or indirectly. 
If this is kept in mind the exporter soon learns by 
experience all he needs to know about foreign 
exchange. 

The beginner in world trade should realize that the 
extension of credit is a gradual development and 
that he can feel his way along this road without tak- 
ing any serious chances. Many foreign buyers have 



FOREIGN CREDITS 107 

bank credits in New York or elsewhere in this coun- 
try, others buy only through established export 
commission houses, the result being in both cases 
that all transactions with, them are virtually cash 
in advance. The essential thing is to keep an open 
mind, considering each case on its merits and re- 
fraining from assuming that, because it is possible 
to avoid all risk in some instances, that every buyer 
can be persuaded to make payment in the same way. 
Each responsible foreign importer is entitled to in- 
sist on doing business as he chooses and the manu- 
facturer who attempts to dictate in these matters 
thereby restricts his foreign distribution. No as- 
sumption of unwarranted risks is required or ex- 
pected. The foreign buyer expects you to be a good 
business man, but he also demands that he be treated 
like one and allowed his just dues, 



CHAPTEE XX 
INTEENATIONAL CEOOKS 

There are dishonest men everywhere and they 
exist in other lands in about the same proportion 
as we find them at home. To the beginner in direct 
exporting this may seem too conservative an esti- 
mate but he must bear in mind that the advent of 
a new source of supply into the field of international 
commercial exchange first attracts the attention of 
a crowd of swindlers, known to export men as inter- 
national crooks, who depend for their livelihood on 
victimizing aspiring exporters whose anxiety to get 
a start may make them willing to take unbusiness- 
like chances. 

The international crook may operate in a variety 
of ways but he has but one aim. He endeavors to 
persuade manufacturers to make shipments of 
goods to his port without adequate financial or 
moral guarantee that he will get his money. Such 
goods may be accepted and not paid for or they 
may be refused at the port of entry, leaving the 
shipper the choice of spending almost as much as 
they are worth to get them back or of abandoning 
them to be sold at auction. In the latter event, which 
is the usual outcome, the crook, knowing the con- 
tents and value of the shipment, is able to bid it in 
intelligently and profitably. 

108 



INTERNATIONAL CROOKS 109 

These swindlers are often endowed with great 
powers of deception. They may operate nnder 
several names, bolstering np the standing of each 
one of them by referring to all the rest. They may 
pay cash for the first few small orders and later, 
by their apparent rectitude and business ability, 
persuade manufacturers to extend credit on larger 
shipments in order to co-operate in building up an 
apparently widening market. 

There is just one real protection against this 
gentry. Subject every overseas order involving any 
risk whatever to the acid test of good business 
methods. The foreign buyer of standing does not ex- 
pect you to be unbusinesslike. Do not trust anyone 
too far on his own representations or on what per- 
sons or firms unknown to you say about him. Make 
the prospective distributor of your goods furnish 
references in the United States or give some sound 
reason why he cannot do so. The man who will not 
respond to a courteous request to do this may 
safely be let alone. Follow up any leads he gives 
you even to the extent of investigating the standing 
of those he refers to if they are not well known 
to you. Supplement the data thus assembled by the 
reports of at least one and preferably several of the 
service bureaus, export publications or other insti- 
tutions in this country who have the facilities for 
making independent investigations. Then submit 
the whole file to your credit man and ask him how 
much he would consider the prospective buyer good 
for if he were located in this country. With this 
verdict at hand, proceed with just as light a heart 
as you would if your correspondent were not doing 



110 AMERICAN METHODS IN FOREIGN TRADE 

business beyond our political frontiers which for 
your purposes are just lines on a map and not in- 
dications of the uttermost boundaries of commercial 
honor and rectitude. 

If all our manufacturers follow this course, the 
international crook will either starve to death or 
turn his evil attentions toward more fruitful fields. 
No one abroad can swindle you out of very much 
if you make him run the same gauntlet that 
eliminates dishonest men at home. The losses of 
our experienced exporting manufacturers who have 
extended credit in all parts of the world over a long 
period of years and on every conceivable basis, sel- 
dom average over one-fourth of one percent and 
usually less. One-eighth and one-tenth of one per- 
cent are not unusual. 

It has been stated elsewhere that the good ex- 
porter, while protecting himself from the bad, might 
even utilize it to good ends. Some instances where 
the attempted swindling of international crooks 
has been turned to advantage are interesting. 

Export managers who have been tricked into mak- 
ing shipments which the customs authorities have 
threatened to sell at auction have at times turned 
the tables by writing some well-established house 
on which they have for some time been working, out- 
lining just what has happened, describing the exact 
contents and value of the shipment and offering to 
instruct the bank holding the dishonored draft to 
turn over all documents without payment provided 
the firm would agree to pay the duty, put the goods 
in stock and sell them at the price they themselves 
would have charged if they had ordered and paid 



INTERNATIONAL CROOKS 111 

for them. After the goods are sold, they are em- 
powered to do whatever they consider fair, from 
keeping all the proceeds to remitting the full value 
of the goods F.O.B. United States port. 

In this way what seemed like a hopeless mess 
has been converted into an opening wedge on a 
difficult prospect. Frequently a large part of a 
prospective total loss has thus been salvaged and a 
valuable new customer placed on the books, for 
many foreign houses on accepting such a proposi- 
tion, have not only been just enough to retain only 
a fair profit for themselves but have also found the 
goods so satisfactory that they reordered them on 
their own initiative. 

To Mr. Walter F. Wyman we are indebted for 
a description of a constructive way to utilize the 
activities of international crooks. When he receives 
an order from someone who, on investigation, does 
not appear to be entitled to the credit asked, instead 
of brusquely demanding advance payment of the 
cash which the other man probably does not possess 
and cannot obtain, he replies, courteously giving his 
reasons for not acquiescing in the terms asked but 
offering to ship direct to any local firm of sufficient 
standing that will assume responsibility for the pay- 
ment of the draft and to instruct the bank that 
handles the transaction to pay the correspondent a 
stated salesman's commission before remitting the 
proceeds to the shipper. 

It frequently happens that the irresponsible 
sender of the order either has a very good idea as 
to where he can dispose of the shipment or has 
already sold it and, seeing no possibility of obtain- 



112 AMERICAN METHODS IN FOREIGN TRADE 

ing his hoped-for illegitimate profit, will take what 
he can get. He can assure himself in advance of 
receiving his fair commission by previous arrange- 
ment with a local bank made by him in accordance 
with the shipper's suggestion. 

Thus have international crooks been not only 
foiled but turned to good account by ingenious 
American sales executives. It is not beyond the 
range of possibility that some of them may thus be 
led in time to see prospects of better profits in fair 
dealing. 

The international crook constitutes no serious 
obstacle to building up a foreign trade if the builder 
has ability and is in earnest. The beginner should 
however be warned that he exists and must be 
thwarted or circumvented. He must never be re- 
garded as typical of any element but his own in 
foreign markets. Above all his activities should 
never be allowed to discourage the fledgling direct 
exporter. 



CHAPTER XXI 
HANDLING FOREIGN CORRESPONDENCE 

If every foreign inquiry that comes to American 
manufacturers during the course of any one normal 
year were properly handled by an able export man- 
ager backed up by a sound and liberal policy, the 
resulting increase in our overseas trade would be 
nothing short of enormous. 

Why it is that so many American manufacturers 
who are successful at home suddenly seem to become 
bereft of all ordinary business judgment when con- 
fronted with a foreign inquiry is a matter that de- 
serves psychological research. In spite of the fact 
that the man at the other end is a being with all 
or most of the physical, mental and moral attributes 
of other humans, it seems hard for many to grasp 
the fact that, even if he wears strange clothes, 
speaks an unintelligible language and cleaves to 
more wives than is openly possible in this country, 
in business matters his ideas and experience very 
closely parallel our own. He in his own environ- 
ment deals with exactly the same elements and is 
influenced and developed thereby. It is to many 
American business men a revelation how closely 
they and their foreign customers agree on what is 
good business and what is not, on what is right and 
what is wrong. 

113 



114 AMERICAN METHODS IN FOREIGN TRADE 

Taking a sound export policy and breadth of 
human understanding for granted, perhaps the 
most important consideration in handling foreign 
correspondence is scrupulous attention to detail. 
Unless you are yourself an expert in foreign lan- 
guages, have the export publication or service 
bureau that you have selected, translate for you all 
incoming letters not written in English. Failure on 
your part to grasp shades of meaning or more 
serious sins of omission are very irritating to a 
correspondent thousands of miles away. Your com- 
petitor with inferior goods or higher prices may, by 
answering the same inquiry with what might seem 
to you like meticulous care, land an order and a 
valuable business connection to boot while you are 
wondering why you hear nothing more from the 
prospective customer. 

Assume that your correspondent, whether he says 
so or not, wants to know every fact that will assist 
him in deciding whether to place a trial order with 
you. Tell him all about your line, the size and 
weight of the unit, the number of units to the pack- 
age, crate or bale, the net and gross weights of the 
minimum shipment, and how it is safeguarded 
against the risks of ocean transportation. Look up 
the customs regulations of his country and give him 
any special information required by them. Do not 
be afraid of writing a long letter or of enclosing too 
many informative leaflets or catalogs. Eemove 
every possible obstacle to a trial order that you 
can see or divine. 

Much of this information can be presented in 
your catalog or in leaflet form, thus cutting down 



HANDLING FOREIGN CORRESPONDENCE 115 

the length of your letter by simply referring to such 
enclosures. The export catalog is discussed else- 
where in this volume but attention cannot too often 
be called to the importance of including in it an 
attractive statement of your business policy and 
your standing in the industrial or commercial world. 

Have all out-going letters translated into the 
language in which previous communications re- 
ceived from the same correspondent were written. 
This seems an obvious courtesy, but it is surprising 
how frequently it is overlooked. With the entirely 
adequate facilities that exist for this purpose, this 
particular form of boorishness is inexcusable. 

Answer all letters received that require a reply. 
No matter how trivial the subject matter or how 
seemingly unimportant your correspondent, it does 
not pay to allow his communication to go unnoticed. 
Send at least a form letter designed courteously to 
discourage further advances. 

From the opening of correspondence with a pros- 
pective foreign customer, an attempt should be made 
to draw from him all possible data regarding his 
standing so that, while business negotiations are 
progressing, you may become sufficiently well-in- 
formed in this respect to enable your credit depart- 
ment, with the reports obtained from export pub- 
lications or service bureaus also at hand, to make 
a prompt decision as to the extent to which credit 
may be safely granted. Some exporters neglect this 
and require cash with the first order pending an 
investigation, but this is scarcely a forehanded 
procedure or one that makes the best of impressions 
on a foreign business man. 



116 AMERICAN METHODS IN FOREIGN TRADft 

By all means follow up good foreign prospects by 
mail. The length of time for which this should be 
done may vary somewhat for each line, but a good 
export manager will never cease working on a pos- 
sible customer with whom he has once been in touch 
and who remains in business, even though he may 
after a certain period cease to give special attention 
to an individual case. This, of course, does not 
apply where previous correspondence reveals situa- 
tions which make what seemed like good prospects, 
either undesirable or very unlikely future customers. 

There is an extreme but very illuminating instance 
on record where an American manufacturer 
developed a large order for mill equipment by five 
years of follow-up work. The original request for 
an estimate came from a man who on investigation 
proved to be of good standing, with experience in 
his line, but without any considerable capital, — cer- 
tainly not enough to buy the equipment in question. 
The latter fact was, however, offset by his business- 
like statement to the effect that he was planning 
to combine his resources with those of some friends 
to start a plant and needed the estimate for pur- 
poses of preliminary discussion. 

The estimate was sent with a number of helpful 
suggestions from the maker's experience with 
similar cases. It was duly acknowledged. Every 
six months thereafter the figures were corrected by 
mail to conform to subsequent variations in market 
conditions, some inquiry was made as to the prog- 
ress of the prospect's plans and the hope was ex- 
pressed that he might succeed in working them out 
and be in a position to favor the manufacturer. 



HANDLING FOREIGN CORRESPONDENCE 117 

Each of these follow-up communications elicited a 
courteous reply giving the reasons for the delay. 

At the end of five years an immensely profitable 
order came through, — an order which, incidentally, 
a German bank tried to switch to a German manu- 
facturer by taking advantage of the necessity on 
the part of the local promoters of giving a guarantee 
for a portion of the purchase price. Fortunately the 
American firm that had worked so hard to get this 
order was able, with the co-operation of the buyers 
on the ground, to club this institution into submis- 
sion. Query for those who believe the German 
banks to have been a source of strength to the indus- 
tries of their home country — How much real good 
will can institutions which use such methods build 
up in any community? 

To return to the question of follow-up work, the 
length of time between each communication should 
be enough to allow for receiving an answer. By a 
little study, rules covering this point may easily be 
formulated for each country or for groups of coun- 
tries served by the same steamship lines. 

The use of form letters and paragraphs in foreign 
correspondence deserves some attention. Para- 
graphs in all the principal commercial languages 
which may easily be copied by a careful typist, are 
used to advantage by many export managers in re- 
plying to first inquiries. This saves some dictation 
in English and much unnecessary translation work. 

Form letters in various languages have also been 
found quite effective when used by manufacturers 
whose product is sold by general merchandizing 
methods and who must therefore carry on a heavy 



118 AMERICAN METHODS IN FOREIGN TRADE 

correspondence with a very large number of firms. 
Where the unit is large and prospective buyers 
fewer in number, it is perhaps best to endeavor to 
give to each communication a distinctive touch. 

Foreign correspondence should reflect throughout 
the spirit of the firm's export policy. Many Ameri- 
can manufacturers whose success long ago placed 
them in an invincible position at home, have allowed 
their business communications to become stand- 
ardized and lifeless presentations of facts. In the 
foreign field these houses must discard such routine 
methods and inject some of the human element into 
the written word. 



I 



CHAPTER XXI 



i 



HEAVY MACHINERY IN FOREIGN MARKETS 






Ameeican makers of equipment involving en- 
gineering problems, such as machine tools, public 
utilities equipment, and machinery for factories, 
mines, steam laundries, repair shops and similar 
enterprises have usually found it to their advantage 
to appoint in each country or important trade 
center, as exclusive agent for their line, a local en- 
gineering house of experience and standing. Where 
satisfactory firms of this kind do not exist, engineer- 
ing and selling representatives are sent out to work 
with one or more local importers in securing orders 
and installing equipment. 

In foreign markets, where the engineering repre- 
sentative is not or does not become qualified to 
assume full responsibility, it is necessary or advis- 
able in connection with all important contracts, to 
supply a skilled man to oversee the installation, 
make sure that it is operating properly and some- 
times even to take temporary charge of the plant 
until such time as others are trained to assume the 
management of it. This involves no hardship, for 
such service is stipulated and charged for in the 
original estimate. This course is far preferable to 
that of leaving a man or group of men to wrestle 
with unfamiliar engineering problems in order to 

119 



120 AMERICAN METHODS IN FOREIGN TRADE 

realize on their heavy investment, with all the con- 
sequent engendering of ill-will for the manufacturer 
and the retarding influence on the development of 
local enterprises using similar equipment. The 
burden of the dissatisfaction in the use of 
machinery, justly or unjustly, falls on the manufac- 
turer and unfavorable mention travels fast. 

The advantages of an intimate connection with a 
good local engineer or engineering firm are mani- 
fold even though the maker assume practically all 
of the responsibility for the installation and suc- 
cessful operation of the equipment sold. Such a 
representative is constantly on the ground and in 
touch with developments, has standing in his com- 
munity and can take care of all routine matters to 
the entire satisfaction of all concerned. There are 
many instances where large orders for which the 
competition was close have been placed with the 
maker whose local connections tipped the scale in 
his favor. 

The working plan in such cases is exactly that 
of exclusive agency as outlined in Chapter IX, ex- 
cept that in transactions involving large amounts of 
money the maker must, of necessity, play a more 
important part in concluding the special financial 
arrangements that are usually made in such cases. 

The extension of credit, in the ordinary mercan- 
tile sense, plays little part in these transactions. 
Everything supplied, being built to specifications, is 
difficult to realize on if not accepted and paid for 
as originally expected. The custom therefore is to 
require an initial payment of 25 or 33% in advance 
with a guarantee from a bank of standing in the 



HEAVY MACHINERY IN FOREIGN MARKETS 121 

United States or the country of destination or from 
a responsible export house for the payment of the 
rest on delivery or installation, or it may be pro- 
vided that such balance be paid in installments as 
the work progresses under suitable guarantees by 
both parties to the arrangement. 

Makers of heavy machinery should, directly or 
through their representatives, keep in close touch 
with new enterprises as announced in the local press 
of foreign countries or as revealed in other ways, 
and, by advertising and circularizing in each mar- 
ket, keep their names and the nature of their lines 
constantly before the more substantial business men 
who are likely to become interested in such equip- 
ment. Often this advertising and circularizing, 
particularly in countries where little industrial 
progress has been made, should be educational 
rather than competitive. It should be designed to 
arouse interest in the development of the industry 
in which the line is used rather than to promote 
the sale of the line made by any one manufacturer. 
The maker who thus succeeds in showing business 
men new opportunities and places himself at their 
service for further enlightenment, has the best 
chance of getting any orders that may later result. 

Machinery manufacturers have found export pub- 
lications of great value in originating inquiries 
from prospective agents and users and, through 
their service departments, in assisting in the con- 
duct of negotiations leading to suitable arrange- 
ments for representation and the placing of orders. 

The heavy machinery field offers exceptional op- 
portunities for export combinations, not of compet- 



122 AMERICAN METHODS IN FOREIGN TRADE 

ing firms as contemplated by the advocates of the 
Webb-Pomerene Act, but of large makers of non- 
competitive equipment. Such coalitions should be 
organized as separate corporations with control 
in the hands of those whose lines are to be sold 
by them. These companies should assume all of the 
selling cost, order from manufacturers for their 
own account and take their profit on all sales. The 
manufacturers represented would thus get their 
profits on all equipment purchased from them, and 
as stockholders, would also participate in the 
dividends of the export company representing their 
lines. 

Such combinations, as they progress, have a great 
advantage in securing the best possible foreign 
representation and can effect large economies in in- 
stallation, the benefit of which would, under far- 
sighted management, accrue directly to the pur- 
chaser, and indirectly to the makers in the form of 
a constantly widening market. 

In forming these combinations the usual objec- 
tions on the ground of divided control or rather the 
inability of any one maker to control cannot be 
avoided though they may to some extent be met. 
Then too, the difficulty of making an agreement be- 
tween such a company and a manufacturer, that 
adequately protects the latter in case of dissatis- 
faction and rupture of relations, is a formidable one. 

For this reason, perhaps, such combinations of 
this kind as now exist are loosely held together by 
the personality and ability of an export agent who, 
as he progresses, adds new but allied lines, making 
a separate agreement with the maker of each. It 



HEAVY MACHINERY IN FOREIGN MARKETS 123 

is much easier to establish a feeling of confidence 
between a manufacturer and a selling agent than 
among several men to be associated in the same 
enterprise and on the same footing. 



CHAPTER XXIII 

THE EXPORTATION OF RAW, STAPLE AND 
STANDARDIZED PRODUCTS 

All the preceding chapters refer primarily to the 
exportation of lines in which quality is an important 
factor. Such products as wheat, lumber, dried fish, 
packing house products, leather, paper, wool, 
metals, steel products, textiles, kerosene and others 
that are graded or made to conform to standards, 
have little or no individuality and the importers' 
and users' interest in the original source of supply 
is correspondingly decreased. Nor is the producer, 
maker or shipper much concerned with the ultimate 
destination of his product or with the attitude to- 
ward him of those who use it. 

In the exportation of some of these lines sales- 
manship may be a factor to a limited extent, but 
it can only be used to create good will for the in- 
dividual exporters among importers abroad. The 
great volume of this business is done on a marketing 
rather than a merchandizing basis and success de- 
pends on intimate acquaintance with the market, 
efficient and economical management, a reputation 
for fair dealing and service to buyers. The seller 
cannot set his figure and then go out and get it. 
Prices are automatically regulated by conditions be- 
yond his control and his margin of profit is what 

124 



STANDARDIZED PRODUCTS 125 

remains out of the difference between the selling 
price and his purchasing or producing cost after 
paying the expense of doing business. His trade 
and the profit thereon may be increased in some 
lines which enter into price competition if he ar- 
rives at a point where his efficiency in production or 
business management permits him to undersell 
competitors. 

It seems very clear that the merchandizing prob- 
lem of the maker of distinctive quality articles 
differs essentially from the marketing problem of 
producers or exporters of raw, staple or stand- 
ardized lines. 

The first, taking his cost of production and add- 
ing to it his selling expense and profit, transfers 
his product at the resulting price to one or more 
middlemen, who in turn must get their expenses and 
profits out of what the customer pays for it. Suc- 
cess depends chiefly on convincing the user that it 
is worth its final cost even though this may be higher 
than the price at which he can buy competing prod- 
ucts. The maker's as well as the middleman's in- 
crease in profit must depend on the steady growth 
of the volume of sales due to the skillful upbuilding 
of demand for the specific make of the product in 
question. 

The producer or exporter of raw, staple or stand- 
ardized products, taking as a basis a selling price 
regulated by the law of supply and demand must, 
by his ability as a judge of conditions, his skill as 
a buyer, his efficiency in management and his ca- 
pacity to serve foreign importers, get into a position 
to supply the needed products at a cost to him that 



126 AMERICAN METHODS IN FOREIGN TRADE 

allows for his profit. The increase in his gains de- 
pends on the amount of business done (except for 
the fortunate or unfortunate turns of the market) 
but this volume of trade in turn depends largely 
on the increase of his capital and prestige and the 
development of his own ability to meet price com- 
petition rather than on the augmentation of con- 
sumption which is regulated by the general economic 
growth of the communities which he and his kind 
supply. 

In spite of this manifest fundamental difference, 
it is amazing to see how often manufacturers of 
quality lines befuddle themselves with the opinions 
and advice of men who have marketed products 
abroad, perhaps for years, but know absolutely 
nothing about merchandizing, domestic or foreign. 
This variation in point of view accounts for the 
fact that two men, both of whom speak with author- 
ity within the limits of their experience, sometimes 
stand up in foreign trade conventions and contra- 
dict each other from the same platform. The ex- 
port brokers of kerosene, copper, steel, lard or cod- 
fish have, from the sales development viewpoint, no 
more in common with the exporters of shoes, type- 
writers, hosiery, and machinery than have those in 
these lines in the home market. The sooner this 
is generally realized, the less mental fog will char- 
acterize our export gatherings. 

It is only the exporters of raw, staple or stand- 
ardized products that may find it possible to com- 
bine to advantage under the provisions of the Webb- 
Pomerene Act. If all or most of the tanners, the 
lumbermen, the meat packers, the paper makers, the 



STANDARDIZED PRODUCTS 127 



copper miners, the steel manufacturers should 
merge into one strong organization for each line, it 
is conceivable that each of such coalitions might 
effect economies that would enable them better to 
meet price competition or successfully thwart the 
machinations of highly efficient buying syndicates 
in foreign lands, for leather is leather, copper is 
copper and paper is paper and buyers care little 
where they come from or who makes them. 

Whether or not, however, it is possible for the 
lions to lie down peacefully together in the foreign 
field while continuing to roar at each other at home, 
would seem to depend largely on the strength of 
the influence their trainer has over them. For the 
manager of such a combination may find the dif- 
ficulty of preserving harmony increasing with the 
volume of business done. How many of the confed- 
erated producers outside of those who dominate 
the merger would become dissatisfied with the 
share of business apportioned them and eventually 
kick themselves out of it, no one can predict. How 
many small members would object in advance to 
relinquishing all control of their foreign business 
to such a combination is equally difficult to estimate, 
but if the Webb-Pomerene Act has any very favor- 
able effect on our foreign trade, it will be a not 
unwelcome surprise to many experienced observers 
of human nature, 



CHAPTEE XXIV 
A PLEA FOR CONSTRUCTIVE CRITICISM 

Foe years our trade and popular press, our busi- 
ness men's conventions and our banquet tables have 
been infested with a type of writer or speaker who 
has irritated export managers almost to the point 
of homicidal mania. Returning tourists, congress- 
men back from a junket, United States consuls at 
home on leave, diplomats of varying degrees of 
prominence and even the heads of large corporations 
who have not the remotest idea how the details of 
their own overseas business are handled, rush into 
print or rise to their feet without hesitation and 
solemnly tell American manufacturers what they 
must not do when they go after foreign business. 
Seldom or never do these mentors advise them what 
to do and how to do it. 

You gentlemen who are the honored heads of our 
great manufacturing corporations, we respect the 
executive ability which your possession of able 
subordinates and the prosperity of your enterprises 
prove. On the subject of general business manage- 
ment you can speak with authority, but when it 
comes to the discussion of anything but the general 
aspects of foreign trade, we much prefer to hear 
from the able man or men whom you so sagaciously 
selected to build up an export demand for your 

128 



A PLEA FOR CONSTRUCTIVE CRITICISM 129 

goods. Tliey know all about how it was done. Yon 
as a rnle know little or nothing in detail regarding 
the methods they have employed. 

Yon who go abroad on business or pleasure, stop 
listening to the thread-bare tales of onr unwilling- 
ness to supply what other peoples want, of our in- 
ability to pack properly for ocean shipment, of the 
brusqueness and uncivil haste of our selling repre- 
sentatives, of our disinclination to extend proper 
credits, of our general social and commercial cussed- 
ness. For they are all lies of the most damaging 
type because they have some slight basis in fact, 
provided by the occurrence of the exceptional. 
When you repeat these things you become a carrier 
of anti-American propaganda originated by com- 
petitors, usually by those who in the past were Ger- 
man, in sympathy or in antecedents at least. 

If you must have something to say to business 
men when you return, do not follow the line of least 
resistance. Disregard the anti- American propa- 
gandists, find out what local firms are regularly 
doing business with our manufacturers and call on 
them. The cordiality of their reception of you as 
a compatriot of their best business friends will per- 
haps astonish you, but you will learn a great deal 
and when you return you will preach the gospel 
of American foreign trade methods as you received 
it from the lips of its most enthusiastic apostles. 
You will tell what our typical exporting manufac- 
turers are doing and urge those who are new in 
overseas markets to go and do likewise. 

You bankers and public men who address our 
manufacturers on foreign trade subjects, stop mak- 



130 AMERICAN METHODS IN FOREIGN TRADE 

ing yourselves ridiculous by slinging at them the 
same old mud which your secretaries excavate from 
the printed record of your predecessors' asininities. 
Some few years ago a gentleman newly but promi- 
nently connected with a banking institution of in- 
ternational fame was invited to speak at an export 
gathering and made use of this opportunity by 
reading American manufacturers a lecture on their 
dishonest practices in foreign trade. This absurd 
and indiscriminate attribution to all of the dishon- 
orable qualities of a few of our black sheep was 
translated by alert German traders into every com- 
mercial language and used to convict our business 
men, out of their own mouths, of unreliability in in- 
ternational dealing in which mutual confidence is so 
important a factor. 

Editors of our popular and especially of our daily 
press, we realize that you must do something to raise 
your reading columns above the level of deadly 
mediocrity, but why, oh why, must you be smart at 
the expense of the future of our overseas trade? 
Many foreign countries, especially the newer re- 
publics, lack a substantial middle class such as we 
have, but their statesmen, scholars, scientists and 
men of affairs compete favorably with our best and 
their worst hardly descends to the I. W. W. level. 
Do you not know that many of the South American 
revolutions you headline are hardly as serious as 
our large industrial strikes? Can you not compre- 
hend that men who speak another language, differ 
from us in temperament and live in other climes, 
may nevertheless be ardent patriots, social and 
political idealists and intelligent and honorable 



A PLEA FOR CONSTRUCTIVE CRITICISM 131 

gentlemen? Must you forever follow the example 
of our beloved 0. Henry, a flagrant offender against 
the principles of international amity, whose cari- 
catures of Latin-American social and political in- 
stitutions will never cease to amuse the unthinking 
or to offend those to whom these institutions are 
vital and precious things? 

Surely you remember or have heard of the wave 
of indignation that swept through our country when 
Dickens rewarded our brief but heartfelt hospitality 
by satirizing without mercy all things American. 
You cannot have forgotten the resentment, some- 
times tinged with pity or amusement, but real re- 
sentment none the less, with which we have read 
descriptions of ourselves and our country by Euro- 
pean travelers. Even now we dislike to remind 
ourselves that many misinformed people of the Old 
World, still believe that we of this country live 
chiefly in a wilderness overrun with wild buffaloes 
and infested with naked savages armed with toma- 
hawks and scalping knives. Yet our press goes on 
disseminating among our own people just such non- 
sense regarding other countries. 

Those of our manufacturers who are really in- 
terested in the foreign field constitute the best pos- 
sible sources of supply for overseas, buyers. Their 
goods are right and they serve their customers 
better than do the makers of other nations. When 
the rest learn to follow their example we shall lead 
all other countries in the international trade field. 

The business men of other lands who import and 
distribute American manufactured goods are in the 
main highminded gentlemen who are striving whole- 



132 AMERICAN METHODS IN FOREIGN TRADE 

heariedly for the advancement of their countries. 
Their customs and institutions may differ somewhat 
from those we boast, but surely ours are not so 
perfect that we cannot afford to regard with interest 
and respect those that have developed in another 
environment. 



CHAPTER XXV 
THE "MADE IN GERMANY" IDEA 

The idea of indicating the country of origin on 
all manufactured articles was first suggested by a 
British law (Merchandise Marks Act, 1887) which 
prohibited the importation of "all goods of foreign 
manufacture bearing any name or trademark being 
or purporting to be the name or trademark of any 
manufacturer, dealer or trader in the United King- 
dom, unless such name or mark is accompanied by 
a definite indication of the country in which the 
goods were produced." 

This measure was designed to protect British in- 
dustry against imitation at home and in those 
foreign markets to which imported goods might be 
reshipped by commission houses. German products 
which were cheap imitations of the most popular 
English lines were being sold in constantly increas- 
ing quantities. 

Smarting from this legislative rebuke which was 
aimed only at piratical foreign manufacturers and 
unprincipled English commission houses, the Ger- 
man Government in a spirit of guilty defiance, 
adopted "Made in Germany" as a permanent 
feature of its maturing policy of nationalizing its 
foreign trade. 

To what extent the appearance of this phrase in 

133 



134 AMERICAN METHODS IN FOREIGN TRADE 

English on all German goods stimulated or handi- 
capped the growth of trade, it is impossible to de- 
termine. It is certain that it had both effects in 
different markets and on various elements making 
up these markets. 

In this, as in many of the German trade policies 
and devices, there are those among us who urge 
us to adopt the same or a similar plan in some form. 
One idea is that of a National Trademark embodied 
in legislative measures which, taking the Sims Bill 
as an example, provide for a design to be approved 
by the President and registered by the Commis- 
sioner of Patents in the name of the United States 
of America without limitation of time and covering 
goods of all descriptions. The Commissioner of 
Patents is instructed to grant licenses for the use 
of this National Trademark at the request of the 
Secretary of Commerce, who is empowered to pass 
on applications for such use, restricting it to makers 
of lines that come up to certain standards. Penal- 
ties are provided for the illegal employment of this 
mark. 

Similar bills introduced at various times in the 
legislative bodies of England and France have met 
with the almost unanimous opposition of trade 
associations and of owners of widely known trade- 
marks. 

All these proposed measures usually have three 
objects as follows: 

1. The prevention of trademark piracy and 
the imitation of American goods by German 
and other firms who have practiced it in the 
past; 



THE "MADE IN GERMANY" IDEA 135 

2. The protection of American-made products 
from foreign competition by so marking them 
that the buyer can discriminate in their favor; 
and 

3. The development of a foreign demand for 
all American goods by so marking them that 
all may be benefited by the prestige that many 
of our products already enjoy. 

If any such measure should become law, it could 
do no good and might do much harm. The subject 
deserves the fullest possible discussion because a 
presentation of the objections to the plan will bring 
out in high relief many of the fundamental prin- 
ciples of American foreign trade policy. 

The piracy of American trademarks is a well- 
known fact. Opportunity to indulge in this form 
of unfair competition has in the past been offered 
by the inadequate protection afforded by the laws 
of many foreign countries, by the carelessness and 
shortsightedness of those trademark owners who 
neglected to obtain all possible world-wide protec- 
tion under existing laws and by the failure of those 
who did take such precautions, to build up a suffi- 
cient overseas demand for their goods to make it 
worth while to go to the expense of fighting those 
who used their marks without going through legal 
formalities. 

The faulty laws of certain foreign countries will 
offer no more protection to a National Trademark 
than to one privately owned and registered. Two 
marks can be pirated as easily as one and, like the 
two pigs under the gate, might make more noise. 
There is much room for the improvement of trade- 



136 AMERICAN METHODS IN FOREIGN TRADE 

mark protection throughout the world. This might 
be accomplished by standardizing the provisions of 
the laws of the leading countries and promoting the 
uniform adoption of them by means of a Convention 
of Nations. When conditions are such in any one 
country that a National Trademark can be fully 
protected, then private marks properly registered 
will suffice. 

The remedy for the failure of our manufacturers 
to protect themselves is a campaign of education 
or, if we are going to paternalize our governmental 
institutions, a rigid provision in our laws that all 
applicants for a private trademark be required to 
register it within a certain period of time in as 
many foreign countries as may be prescribed under 
penalty of a revocation of their right to use it at 
home. If our manufacturers in this day and age, 
after all the years that this subject has been agi- 
tated, have not sense enough thus to protect their 
future in world markets, by all means make them 
do it. It will take something more than a National 
Trademark to safeguard our foreign trade from this 
form of provincialism. 

Where a trademark is properly registered in a 
foreign country and the owner does not or 
cannot accomplish enough to make it worth while 
to fight for its protection, the brand is not worth 
much to the man who pirates it or to the manu- 
facturer who owns it. Its theft does little harm 
and at least serves as a convenient excuse in ex- 
plaining the owner's failure to get business in a 
supposedly good market. 

It is also true that American lines have been 



THE "MADE IN GERMANY" IDEA 137 

imitated in form and general appearance by foreign 
manufacturers but the injury lias not been as great 
as many would lead us to believe. Germany 
sold imitations, undoubtedly in large volume, in 
markets where certain American lines were in favor 
but where our manufacturers had neglected their 
opportunities. How much of this business would 
otherwise have come to us no one knows, but the 
fact that German traders were able to accomplish so 
much with an imitation shows that they had in such 
cases practically a clear field free from any effective 
opposition on the part of the makers of the real 
article. Our manufacturers will never get much 
foreign trade merely by eliminating the evil prac- 
tices of others. When they stop whining and go 
after business hard, their imitators have as little 
chance abroad as they have in the home market. 

For instance, does anyone believe that Germany 
in pre-war days could have made and sold so many 
"American" shoes if our manufacturers had been 
on the ground to make the most of the prestige that 
their product enjoyed? Or can it be said with 
assurance that if German traders had not used 
imitating tactics, the business they secured would 
have come to us? It was not by these methods 
alone that they succeeded. Factors involving price, 
credits, deliveries, etc., also entered into the selling 
campaigns. 

Such trade as Germany secured largely by mis- 
representation was always very vulnerable to com- 
petition. The way to beat the imitator is to go 
after him and show him up and if makers wait for 
their Government to do this for them under the 



138 AMERICAN METHODS IN FOREIGN TRADE 

provisions of a National Trademark Law or any 
other measure, they are not destined to play any 
very striking role in the foreign trade field. 

So much for the first object of these measures. 
Let us see what is to be hoped for along the line 
of protection from foreign competiton in the home 
market. 

We are too much inclined in times of intense 
national feeling to forget that under normal condi- 
tions, people everywhere buy what they do, not be- 
cause of where it comes from but because they want 
it. Some, it is true, always favor goods of home 
manufacture for sentimental reasons, but others go 
to the opposite extreme and show a preference for 
imported goods. "A prophet is not without honor 
but in his own country.' ' Some of us are snobs 
and must have what the masses cannot afford. 
Others among us feel for articles of home manu- 
facture the contempt that is bred of familiarity with 
them and their makers. Between these two ex- 
tremes lies the great mass of consumers who "want 
what they want when they want it." 

If it is desirable that all our people be inoculated 
with a prejudice against foreign made articles this 
could be accomplished with more flexibility by re- 
quiring that imported articles be branded with some 
distinguishing mark. By this method we could 
discriminate against specific lines or goods of one 
origin only instead of raising a barrier against the 
whole outside world. This plan would have the 
added advantage of not identifying our products 
to anti- American buyers abroad. 

There is, however, much doubt as to the desira- 



THE "MADE IN GERMANY" IDEA 139 

bility of educating our people to buy only American 
made goods. In advocating the protective tariff 
policies that until recently found favor with our 
people, the leaders of this school of thought un- 
fortunately popularized the idea that to export in 
great volume without importing anything spells 
economic paradise. Of course no such condition 
could exist without the rapid and complete ex- 
haustion of the gold reserves of other countries and 
resulting financial chaos. Profit is not made by the 
sale of goods but by the exchange of them for other 
products. 

The sentimental boycott of imported goods is 
open to another objection. We want the merit of 
reputable American lines to receive its just reward 
in foreign markets. Can we expect this to be any- 
thing but reciprocal? Would other countries fail 
to retaliate? Do we want to bring about the state 
of commercial war that would result from re- 
taliation? 

Too much care cannot be exercised in interfering 
with economic laws. Goods should sell on intrinsic 
merit. This is sound economics. To substitute for 
this normal buying motive an extrinsic sentimental 
consideration would be extremely perilous. It is 
fortunate that the success of any attempt to do 
this is very improbable. 

As for the third object of National Trademark 
legislative proposals, the development of a foreign 
demand for all our products, the fundamental 
theory is faulty. American goods as such do not 
enjoy any considerable degree of popularity. They 
never will be purchased in volume because of their 



140 AMERICAN METHODS IN FOREIGN TRADE 

origin. As previously stated, we have achieved 
some international reputation for fabricating skill 
which is helpful in a minor way but there is not the 
slightest doubt that any of the great export successes 
of our manufacturers could have been made equally 
well from a European city, all other factors such as 
quality, design, selling methods, factory organiza- 
tion and salesmanship remaining the same. We 
must get it out of our heads that we have or ever 
will have any great good will advantage in world 
trade solely because we are located in the United 
States. We should, as so often reiterated, depend 
on the quality of our products and our salesman- 
ship. These two factors vary greatly among all 
firms and are subject to change with changing per- 
sonnel, except as standardization of producing 
methods makes for uniformity of the first. 

In the past there have been exported from the 
United States some of the best and the worst goods 
that ever went into a foreign market. All of our 
manufacturers are not entitled to the good will 
gained by the former (in fact they cannot acquire 
it) nor are they necessarily handicapped by the ill- 
will generated by the latter. We want only those 
who deserve it to succeed in foreign trade. They 
will without the adoption of trade nationalization 
policies, if they but try. A National Trademark 
would offer no encouragement to them but it would 
tend to stimulate the export activities of makers of 
inferior goods. 

A trademark is often defined as a symbol in- 
dicating the origin of goods on which it appears. 
To Mr. L. A. Janney we are indebted for a more 



THE "MADE IN GERMANY" IDEA 141 

exact definition — a symbol indicating a common 
origin and quality for all goods on which, it is used. 
In other words, all articles bearing a given mark, 
are supposed to have back of them the individual 
responsibility of the same maker or merchant. 

A trademark is therefore not only designed to 
protect its owner in the enjoyment of his good will 
but is also a guarantee to the consumer against de- 
ception. The latter function is in the eyes of the 
law equally if not more important. 

A National Trademark applied to goods of 
many kinds and origins would therefore not be 
a trademark at all. It would not indicate common 
origin and quality and thus be a guarantee to the 
public. For this reason, it is doubtful if it could 
be protected under existing laws and the amend- 
ments that would be necessary to make it possible 
to prevent its unsanctioned use would weaken if 
not destroy the whole foundation on which existing 
trademark legislation rests. Furthermore, the idea 
of a national government becoming a trademark 
owner and the theory that by license the right can 
be acquired to use a trademark on goods over 
whose manufacture the owner of the mark can ex- 
ercise no adequate control, are innovations, to put 
it mildly. 

So much for the negative aspect — the uselessness 
— of the proposal embodied in such measures. Let 
us see what positive harm might result if a National 
Trademark came into use with or without protec- 
tion throughout the world. 

To the individual, a trademark stands for just 
what his experience has been with the article on 



142 AMERICAN METHODS IN FOREIGN TRADE 

which it is used. Its value to its owner depends, 
not on what it means to those who like the product 
best, but on the common run of the experience of 
all. Thus the power of a trademark to attribute 
excellence is in the last analysis determined by the 
average quality of the line on which it is used and 
this average is lowered by any disproportionate in- 
crease in the sale of inferior goods bearing the 
brand. 

Many American manufacturers have a high 
reputation throughout the world for quality of 
product. If they use, in addition to their private 
brands, a National Trademark over whose general 
employment they individually have no control, they 
to some extent identify their products with all 
others so labeled and are therefore damaged in the 
eyes of the public by every maker of inferior goods 
who uses the same symbol, and the consumer at home 
and abroad is to some extent deprived of the full 
measure of protection to which he is legally en- 
titled. It is argued that the simultaneous use of 
private marks would prevent this but who can tell 
which of the two will catch the buyer's eye? If 
a National Trademark is to be of any value it must 
be conspicuous and the more striking it is, the 
greater the possibility of harm in such cases. 

The gentleman who drafted the Sims Bill is said 
to have declared that a National Trademark should 
only be expected to indicate the country of origin 
and that any attempt to make it do more would 
result in failure. The difficulty is that no one can 
make a trademark do anything to order. Its great 
value lies in the fact that, refusing to act as its 



THE "MADE IN GERMANY'' IDEA 143 

owner may desire, it goes steadily on performing 
its one great service, that of indicating to the 
buyer the origin and quality of something he has 
purchased before or that has made a favorable im- 
pression on him through advertising and other 
merchandizing aids or by its reputation among his 
friends and acquaintances. No one can possibly 
know what a National Trademark widely used on 
goods of all kinds may one day come to stand for. 
Certain it is that he who uses it runs the risk, 
through no fault of his own, of having it meet the 
eye of those to whom it has an undesirable sig- 
nificance. 

Making the use of a National Trademark volun- 
tary does not help much for the manufacturer who 
elects not to use it is constantly subject to mis- 
representation. His competitors then could and 
would claim that his goods were not up to required 
standards. 

To meet these objections it is proposed that 
licenses should only be issued to makers of lines 
that come up to certain specifications. To this the 
American Chamber of Commerce in London in a 
protest said that "the restriction of the mark to 
strictly standardized goods is impractical and im- 
possible of efficient application. ' ' How and by 
whom are these standards to be established? What 
steps can be taken to insure that applicants once 
accepted would maintain them? Surely a small 
army of expert examiners backed up by another of 
inspectors would be required thus to protect a Na- 
tional Trademark from use by those not entitled 
to it. 



144 AMERICAN METHODS IN FOREIGN TRADE 

Then, too, whatever standards are established, 
they cannot be the highest for too many would then 
be excluded. If they are not the highest the un- 
fairness to those who maintain superior standards 
still inheres. 

It is hard to make any adequate statement of the 
difficulty of the task such a law would impose on 
the Secretary of Commerce. Every manufacturer 
thinks his goods are up to standard and would not 
readily give up an attempt to acquire the right to 
use the mark. Innumerable disputes and accusa- 
tions of favoritism would result. The impossibility 
of performing the task to anyone's entire satisfac- 
tion would speedily lead to the admission of all to 
the supposedly distinguished company of National 
Trademark users. It is no disparagement of the 
ability of Secretaries of Commerce past, present or 
to come, to say that their responsibilities under such 
a law would be too great. 

It has even been suggested that owners of private 
brands might substitute the National Trademark 
for them. In view of the foregoing, this is too silly 
to deserve more than passing mention as showing 
how far afield the supporters of this idea have gone 
in their attempts to bolster themselves up in their 
position. 

The employment of a common mark on competing 
lines would greatly facilitate substitution. Every 
leading maker aims to distinguish his goods from 
those of his competitors and does not welcome the 
idea of using a trademark that can be referred to 
as an evidence that other articles than his are really 
the same though put up differently for reasons that 



THE "MADE IN GERMANY" IDEA 145 

are confidential. The substitution evil is serious 
enough as it is. 

The Irish trademark is frequently cited as proof 
of the practicability and desirability of this move- 
ment. Some enthusiasts attribute to it the success 
of the products of the Emerald Isle in foreign 
markets. In the absence of any tangible evidence, 
most experienced exporters will prefer to believe 
that Irish goods are in demand because they are 
what they are and because the makers of them know 
how to sell them. 

Opponents of these measures have been accused, 
even by those in high places, of a selfish unwilling- 
ness to use their prestige in foreign markets built 
up by years of hard and expensive work, to help 
others enter the field. There may be some slight 
basis for this where direct competition is con- 
cerned. If so, what of it? Is there anything repre- 
hensible in this! Are we or are we not a nation 
of competing individuals and if we are, must we, 
competing at home adopt another policy abroad in 
the name of patriotism? Must we at the behest of 
those who advocate the national exploitation of 
foreign markets, abandon the individualistic meth- 
ods that we have found so successful? Foreign 
trade is no more a national matter than is domestic 
commerce. Again, it must be repeated, we do not 
sell abroad as a nation but as individuals. The 
truly patriotic American manufacturer is he who 
earns the confidence of his consumers at home and 
abroad and then protects them all equally. 

Our exporting manufacturers are not averse to 



146 AMERICAN METHODS IN FOREIGN TRADE 

extending a helping hand to the beginner in foreign 
trade. In fact the spirit of co-operation that they 
show in assisting others to solve their problems and 
in communicating facts regarding their experience 
with foreign buyers is extremely praiseworthy. 
They do, however, object decidedly and justly to 
inflicting needless damage on their consumers, their 
distributors and themselves for the sake of a 
theoretical benefit to all other manufacturers, de- 
serving and undeserving alike. 

This whole movement is a piece of patriotic senti- 
mentalism. It is not based on an acquaintance with 
the real factors in foreign trade. It cannot do any 
good and may do much harm unless some way is 
found to curb this phase of the activities of our 
theoretical exporters who attract the unthinking and 
the inexperienced to the support of their plans for 
conquering world markets by Act of Congress. 



CHAPTER XXVI 

A SUGGESTION TO THE DEPARTMENT OF 

COMMERCE 

Judging by what is said in export gatherings by 
local representatives of the Bureau of Foreign and 
Domestic Commerce, which is a branch of the De- 
partment of Commerce, there is a feeling that 
American manufacturers either do not fully under- 
stand or do not quite appreciate the work the 
Bureau has been doing in recent years. On every 
possible occasion laudable attempts have been made 
to remedy this supposed situation. As a matter of 
fact those of our manufacturers who have made a 
start in direct exporting, do appreciate and use the 
help that the Bureau offers. Those who as yet have 
no export selling policy and do not know how to 
do business direct in foreign markets, also appreci- 
ate the Bureau's work but remain inactive. 

The reason is this: The best that the Bureau 
has thus far been able to do is to provide our ex- 
porters with tools. It has not been able to show 
the inexperienced and unskilled how to use them. 
Most of our manufacturers look at the attractive dis- 
play in the show windows of the Bureau's branch 
offices with sincere regret at their inability to become 
patrons but with a fear that if they attempt it, they 
will cut themselves and bleed to death. It is cer- 

147 



148 AMERICAN METHODS IN FOREIGN TRADE 

tainly no reflection on the quality of these tools to 
say that many of those who might try to use them 
would at least run a chance of maiming themselves 
badly. 

The remedy for this is very simple on paper. In 
practice it might prove more complex and difficult, 
but the idea offers so much food for thought to both 
Government officials and manufacturers that it is 
worth while to consider it carefully. 

The Bureau of Commerce might bridge the gap 
between its excellent service and the manufacturer-' s 
inability to use it by finding a man who has the 
confidence and respect of the majority of our export 
managers and who is capable of making a thorough 
study of any manufacturer's line, policy and in- 
ternal situation, and then from his own experience 
or by consultation with export managers of his ac- 
quaintance, show such a prospective exporter how 
the things he is doing in the home market can, with 
slight modifications, be done in foreign trade — how, 
in other words, he, without any radical departure 
from his established policies, can direct the selling 
genius that has made him successful at home, into 
a wider field. , 

Such a man when found should be given the 
appropriation and the power that are necessary to 
enable him to multiply himself through a staff of 
carefully selected office subordinates and field 
workers so that the service could be extended to 
cover all industrial regions. 

There is no difficulty about this plan so far as 
manufacturers are concerned. They would welcome 
it and would probably be glad to pay a fee more 



A SUGGESTION 149 

than commensurate with the cost of the service, if 
any such arrangement with a Government bureau 
were possible. The light it would shed where all 
is now darkness is surely needed and they know it. 

It would be easy to secure the assistance of 
export managers. They are the most willing co- 
operators that we have in our business life. On 
their ability and readiness to help others depend 
the successes they are making. They believe in sound 
and constructive team work and would be among 
the first to endorse and actively back up such a 
plan if they could see any glimmer of promise that 
it might be carried out effectively. 

The difficulties are these: 

First, it would not be easy to find a man who a 
has the ability and versatility to undertake such a 
work with fair prospects of success. Men of this 
type are scarce. They are most of them firmly tied 
up to private interests. 

Second, it would be hard to be sure that the man, 
once discovered, was the right one. A wide ac- 
quaintance with Senators and Representatives 
would scarcely prove it. Probably the best test 
would be his standing with export managers. 

Third, if such a man were located and positively 
identified as the right one, the Bureau would prob- 
ably not be allowed by the Congress to pay him 
what he is worth to private business or provide him 
with sufficient funds to do his work. Once found, 
he would be worth to our Government any figure 
in reason that it might cost to secure his services. 

Fourth, the red tape of official Washington and 
the requirements of the Civil Service Eegulations 



150 AMERICAN METHODS IN FOREIGN TRADE 

might so hamper him in the building up of his 
organization and the supplying of efficient service 
that in spite of his ability and any Congressional 
generosity as to his budget and his own compensa- 
tion, he might fail in his undertaking. 

If the Department of Commerce would do some- 
thing really big for the foreign trade of the United 
States, it should find some way to carry out the 
above plan or some modification of it. We have 
no weakness in foreign trade except this — the vast 
majority of our manufacturers have no export 
policy. They have the goods, the markets are there 
and every necessary mechanical facility is ready to 
their hand. All they need to be shown is how to 
sell their particular line abroad. 

And while the Department of Commerce is trying 
to solve this problem, may it not overlook the im- 
portance of dissuading our lawmakers from fooling 
with foreign trade legislative proposals which, in 
the opinion of the vast majority of export managers, 
are so full of dynamite that, if not safely stored in 
obscure, well-padded pigeonholes, they may break 
loose and tear holes in the structure of our existing 
overseas commerce that cannot be repaired in a 
generation. 



CHAPTER XXVII 
AMERICAN BANKS ABROAD 

Students of foreign trade who during pre-war 
years followed the arguments of advocates of the 
establishment of American banks abroad, without 
doubt gathered the impression that the lack of 
such institutions was a serious handicap to our 
exporters. As a matter of fact, those who have 
been engaged in foreign merchandizing have sel- 
dom or never had the slightest difficulty in financing 
the trade they secured, through English, Spanish, 
French, Italian or German branch banks or through 
local institutions in the different countries where 
they did business. 

Insofar as they could do so without serious detri- 
ment to their own standing, some of these banks, 
especially those under German control, sometimes 
placed obstacles in the way of American exporters 
or of local importers who desired to buy our prod- 
ucts, but the extent to which such practices prevailed 
was limited by the obvious certainty that such a 
course would have so undermined the prestige of 
a bank that persistently followed it, as to handicap 
it very seriously in competition. 

The indulgence of German banks in such viola- 
tions of good business principles had in 1914 made 
their situations precarious in many foreign markets 
for, having lost the confidence of many of the best 

151 



152 AMERICAN METHODS IN FOREIGN TRADE 

business men of their communities, they were being 
forced more and more to confine their operations 
to the less desirable factors in local trade. 

On the whole, however, the statement that Ameri- 
can manufacturers, previous to 1914, experienced no 
serious difficulty in financing their legitimate 
transactions in foreign markets will stand the test 
of careful investigation. Why then the agitation 
for American banks? 

It is doubtful if any great trade advantage would 
have resulted, if we had had American branch banks 
in foreign countries previous to the outbreak of the 
war. Banking is a highly competitive service, the 
establishment of which seldom if ever precedes the 
existence of a sufficient volume of business to enable 
it to show a profit. Banks do not sell goods. They 
can at best do little more than facilitate the ex- 
change of products that results from the buying and 
selling activities of manufacturers and traders. 

That ample facilities were in existence for finan- 
cing pre-war trade is best evidenced by the fact that 
capital did not flow into international banking 
channels. In fact, in few foreign countries was there 
any noteworthy dearth of either banking or trading 
capital. In many of them investment capital for 
the development of natural resources and private 
enterprises of various kinds was badly needed, but 
no one would seriously contend that American com- 
mercial bankers would have attempted to supply this 
lack as did the more speculative Germans, backed as 
they were by the resources of their government. 

There is a distinct tendency on the part of our 
manufacturers to regard the establishment of 



AMERICAN BANKS ABROAD 153 

American banks abroad as a sort of assurance that 
they will have a great foreign trade. As a matter 
of fact it means nothing of the kind. Their trade 
and the very continuance of the existence of such 
banks will depend almost altogether on the selling 
efforts made by each American maker of manufac- 
tured goods and the development in this country of 
a market or clearing house for the products of other 
lands. Our foreign branch banks give promise of 
supplying an excellent service to those who put 
themselves in a position to use it but more than this 
cannot fairly be expected of them. 

American banks abroad, while they cannot make 
sales for our manufacturers, should accomplish 
several very desirable objects. They should by ex- 
tensions of credit to local firms greatly increase the 
usefulness of existing trading capital. They should 
facilitate the permanent investment in local enter- 
prises, of American capital which, in the future, 
must go abroad for opportunities. They should 
serve as centers of Americanism in each foreign 
community, spreading abroad our ideas of good 
business and making it easier for our manufacturers 
and exporters to establish their standing with local 
merchants. 

American branch banks abroad should also ac- 
complish much in gathering specific information and 
passing it on to our manufacturers in readily 
utilizable form. This information falls into two 
classes, i.e., data regarding special trade opportuni- 
ties and reports on the standing of foreign buyers. 
Considerable progress is being made along these 
lines. 



154 AMERICAN METHODS IN FOREIGN TRADE 

What perhaps constitutes the greatest incidental 
help that our foreign banks will give us is that in- 
tangible but none the less real service of promoting 
among business men everywhere an acquaintance 
with the United States and its real political, com- 
mercial and social aims. Unfortunately we are 
misunderstood in many countries. Our European 
competitors, particularly those of Germany, have 
devoted more and more attention to misrepresenting 
our diplomatic and trade policies as we have made 
greater progress year by year in each market, and 
their assertions have unfortunately often been 
corroborated by the eagle-screaming emanations of 
some of our loud-mouthed traveling Americans who 
are in no way representative of the United States. 

Some of our press have also lent color to our 
competitors' misrepresentations, and to make mat- 
ters worse, the lack of adequate passenger steam- 
ship service between our ports and those of many 
foreign countries has prevented anything like the 
great annual pilgrimage of business men to Europe 
from contributing its part to the improvement of 
our international relations. In Australasia, the 
Far East and South America we are not generally 
known as we really are. Our exporting manufac- 
turers have done much to correct mistaken impres- 
sions but our foreign banks, with their more general 
contact with the life of each community, should ac- 
complish even more. 

To accomplish all this American bankers who 
have ventured into the overseas field need the co- 
operation of our exporters but, on the other hand, 
they must deserve it. They should not depend on 



AMERICAN BANKS ABROAD 155 

sentiment to divert business originating in this 
country to the new channels that they have estab- 
lished. Their foreign exchange managers must not, 
for the sake of the immediate showing their depart- 
ments can make, take advantage of the ignorance of 
our fledgeling exporters. Constant efforts must be 
made to serve the overseas interests of our manufac- 
turers in every legitimate way. 

It is not necessary or even desirable that our 
bankers attempt to go to the extremes that those of 
Germany have gone in the past. We want the best 
service obtainable with the least possible cost to us 
and to our foreign customers. We do not desire 
that those of our competitors who find it advan- 
tageous to use the foreign branches of American 
banks, should be subjected to the slightest dis- 
crimination. We do not have to resort to such 
methods to sell our products and if we did, we should 
feel there was something wrong with us and that 
we were on very unsafe ground. 



CHAPTER XXVIII 

FOREIGN INVESTMENTS AND EXPORT 

TRADE 

There is in the United States a school of foreign 
trade thought that believes that without the invest- 
ment of American capital in local enterprises 
throughout the world, we can never accomplish 
much in world markets. This question is worthy of 
some discussion because our past failure or rather 
inability to follow the lead of England and Germany 
in this respect has frequently cropped out as one 
of the excuses given by our manufacturers for not 
making an effort to get overseas business, and be- 
cause many if not most of those who have been 
advocating such investments are doing so on an 
unsound basis. 

Here again the apparent success of the German 
system of getting a strangle hold on foreign en- 
terprises and then squeezing business out of them 
for the benefit of the homeland has corrupted some 
of us mentally or morally. 

The idea seems to be that, now that we are a great 
creditor nation, our bankers will, when they supply 
the money to build a waterworks system for some 
foreign city, either specify in advance or later in- 
sist that American-made materials and supplies are 
to be used throughout. Thus, it is contended, our 

156 



FOREIGN INVESTMENTS 157 

makers of cement, pipe, valves, etc., will benefit 
from a great increase in the " demand' ' for their 
products. The same reasoning applies to the build- 
ing of railroads, hydro-electric plants and other 
similar enterprises. 

"Demand" is scarcely the word to describe what 
may sometimes prove to be the unwilling but en- 
forced acceptance of a necessary evil. Let us sup- 
pose for the sake of argument that the best possible 
valves for a waterworks system are made in Eng- 
land or that, owing to a great demand in other parts 
of the world, the best American valve makers are 
unable to accept new orders. Is it to our real in- 
terest to have inferior American valves forced 
on those who in the last analysis must pay the bill 
when in all justice they should be allowed to pur- 
chase the goods that are best for them? 

Let us use a homely illustration. Assume that 
you are a retail merchant in need of financial 
assistance and go to a bank president who after 
looking over your statement admits that you are 
entitled to accommodation and agrees to extend it 
on condition that you discontinue certain lines of 
merchandise and substitute for them the goods made 
by certain depositors of the bank or by friends of 
its president. If you are a good business man, if 
your need is not too pressing and if there is hope 
of getting the money on a cleaner basis elsewhere, 
you would turn this down. Suppose, however, that 
you were in a position where you had to accept this 
proposition or nothing, or that, after the banker 
had extended the asked-for assistance with no 
strings to it he took advantage of your position to 



158 AMERICAN METHODS IN FOREIGN TRADE 

force you to accept the further conditions named. 
Would it be good business for him or for his de- 
positors and friends whose products would thus be 
thrust upon you? You would then have to carry 
the loan without the privilege of using your own best 
judgment in the management of your business. 
Would you feel that you had been treated with com- 
mon decency? And what would you do to that 
banker and his precious crew of " squeeze' ' artists 
if you ever got back on your feet and opportunity 
offered? 

Do you, the business executives of the United 
States of America, want to see our international 
bankers do exactly the same thing to foreign com- 
munities who need our capital? Do you think it 
would be good business for the bankers or for you? 
Do you need any such help to sell your products? 
Or do you want those who hold the purse strings 
to say something like this? 

"We have looked into your project and find it 
sound. Owing to a combination of circumstances 
we have the money to finance it and will let you 
have it under certain fair conditions and at the 
usual rate of interest. The report of our experts 
shows that you are entitled to this and you will get 
it. So much for that. 

' ' It has occurred to us, however, that in carrying 
out your project you will use a great many things 
that are made in the United States as well as other 
countries. We shall appreciate it if you will give 
our manufacturers an opportunity to demonstrate 
what they have to offer. You understand, of course, 
that as your financial backers, we are desirous first 



FOREIGN INVESTMENTS 159 

of all that you make a success of your project. We 
do not want the fact that we are Americans to 
influence you into buying anything in our country 
that you would not otherwise purchase on its 
merits. You are paying us what our money is worth, 
we are satisfied with the security and, rather than 
handicap you in the development of your plans, we 
prefer to leave you to work out your salvation 
unhampered, because the success of your operations 
and those of others like you will in time lead to 
the development of a sound prosperity throughout 
the whole community. Many American goods are 
now sold here on their merits. More will be sold 
when the per capita buying power of your country 
increases. Our general commercial relations will, 
we hope, become constantly closer and mutually 
more advantageous, but that will be a legitimate re- 
sult of our co-operation with you and others who 
need our capital." 

Is it necessary to ask any American business 
executive which of these attitudes he favors! Can 
we ever achieve anything by * i squeeze ' ' methods that 
will even approximate what we can accomplish by 
being straight-forward business men in all our deal- 
ings with other peoples? If we have capital to 
export, we must find foreign investments, but re- 
gardless of what others may or may not do, let us 
not assume that after exacting a fair price for what 
we have, we can force other advantages, just be- 
cause what we happen to have is money. Let us be 
leaders, not servile imitators of others. 

Let us therefore not only not encourage our in- 
vestment bankers to adopt the unfair methods that 



160 AMERICAN METHODS IN FOREIGN TRADE 

have been all too common in international financing, 
but let us go further and positively discourage, as 
inimical to our best interests, any such tendencies 
that may crop out in them. Let us as a people take 
the stand that we want first to help others to the 
prosperity that we enjoy because it will make the 
world a better place and because this will in turn 
benefit those of us whose goods and service entitle 
us to a deserved recognition in world markets. 

In spite of the universal resentment that was 
the ruin of Germany — a dislike that grew out of 
her business methods as well as the conduct of her 
military campaign — in spite of our more or less 
general recognition that her downfall was primarily 
due to her commercial arrogance and brutality, it 
is remarkable how many there are among us whose 
minds have been tainted with the poison that warped 
the intellects of the Kaiser's subjects. 

A word to American manufacturers. Do not wait 
for heavy investments of American capital to open 
up foreign markets for you. They are now ready 
and waiting if you make good products that are in 
general use. Their possibilities will increase with 
the development of their natural resources but those 
who are on the ground and working through estab- 
lished distributors will get the greatest benefit from 
such growth. 

If your products are such that large foreign de- 
mand for them depends chiefly on the higher de- 
velopment of the social, commercial and industrial 
life of overseas markets, and you can demonstrate 
their worth, start at once to get a foothold with- 
out waiting for the intrigues of capital to get 



FOREIGN INVESTMENTS 161 

business for you. A new era has begun — an 
era in which those who need capital will get 
it solely because of that need and because they 
deserve it. Investment will be investment and not 
loan-shark exploitation. Those who get our money 
will be left free to use it to the greatest possible 
advantage. Whatever you make, you will benefit to 
exactly the extent that you are in a position to 
demonstrate the value of your products. We 
have shown the world that we know how to sell 
goods fairly everywhere. Our investment bankers 
can never go out into the atmosphere of American- 
ism that characterizes our international trading 
operations and succeed by acting like anything else 
but believers in the inalienable rights of all peoples. 



CHAPTER XXIX 
THE AMERICAN MERCHANT MARINE 

Ocean transportation is a commodity and those 
who supply it must, to make a success of their busi- 
ness, meet price competition, subject to the law of 
supply and demand, or render a distinctive quality 
service and get what it is worth regardless of what 
someone else charges for a similar article. 

Our exporting manufacturers have had little or 
no fault to find with the quantity or cost of the 
transportation supplied by foreign-owned steam- 
ship lines. It has been easy to make freight ship- 
ments to all parts of the world at almost any time. 
The thing that has been chiefly lacking was speed, 
not only in the dispatch of goods but also in making 
delivery once the shipment was entrusted to the 
transportation company. There has also existed a 
great need of fast mail and passenger service be- 
tween this country and many important foreign 
markets. 

Much that has been said and written in advocating 
an American merchant marine has been arrant non- 
sense and has done the cause more harm than good. 
The large annual toll paid to foreign-owned steam- 
ship lines for the transportation of American 
products was not, as one writer puts it, a loss to 
us and a gift to other countries. It represented in 

162 



THE AMERICAN MERCHANT MARINE 163 

the main a fair price for valuable services rendered 
and we did not pay it anyhow. The ultimate con- 
sumer pays the freight. 

Neither is it accurate to say that England and 
Germany had a big foreign trade because their flags 
were constantly flying in every port and draw there- 
from the deduction that we could never expect to 
accomplish much in overseas markets until our flag 
was made to do likewise. England and Germany 
had a big merchant marine because their merchants 
built up a great foreign business and because their 
laws were favorable to the development of home- 
owned steamship lines. 

The United States had a large and ever growing 
overseas trade when almost wholly dependent on 
alien-owned ships for delivery service. Foreign im- 
porters buy goods, not flag-waving exhibitions, and 
shipping lines are established not primarily to 
build up business but to serve for a profit those who 
are the real developing influence — the importing and 
exporting traders of all lands. 

It is unfortunate that so many business men who 
are endowed with good thinking powers often can- 
not write and that so many who write well have 
never had any business experience. Every export- 
ing manufacturer in the United States knows that 
his goods sell because they are what they are and 
not because they originate in this country. He 
knows that any conceivable number of American 
flags flying in the harbor of Buenos Aires, would 
have little or no direct effect on the demand for his 
products there yet he has had to go on reading and 
being told that the success he was actually making 



164 AMERICAN METHODS IN FOREIGN TRADE 

was impossible because without American ships, 
how could it be? The tendency of our advocates of 
ship subsidy, government ownership of steamship 
lines or other similar national projects, to forsake 
the solid ground of facts and soar in the upper air 
of discreditable theory has seldom given our legis- 
lators anything that could with any advantage be 
passed on to their hard-headed constituents. 

There are very sound reasons why the United 
States Government should in some way continue to 
favor the American control and management of the 
steamship lines that we have as a result of the war- 
born program of shipbuilding. The preparedness 
argument is not new but the predicament from 
which we extricated ourselves at great cost, served 
to drive it home with a force that should make 
itself felt for generations. Surely no good Ameri- 
can now living will ever forget the U-Boat peril, so 
totally unforeseen by anyone but the diabolical 
plotters of Potsdam. 

Nevertheless the terms of settlement of the Great 
War may seem to many to offer guarantees against 
any similar future occurrence and thus dull the edge 
of the preparedness argument. At any rate there are 
good business reasons for the maintenance of 
American-owned steamship lines. 

The fostering of closer commercial and political 
relations between the United States and other coun- 
tries demands faster steamships for freight and 
especially for carrying mail and passengers. One 
of the great advantages that European manufac- 
turers enjoyed for decades was the year round 
stream of foreign visitors that entered their ports 



THE AMERICAN MERCHANT MARINE 163 

and circulated through their industrial centers and 
recreation or health resorts. These travelers, re- 
turning to their native countries, spread abroad 
there a knowledge of French, German and English 
customs and institutions and promoted a popular 
acquaintance with the statesmen, scholars and busi- 
ness leaders of these countries. As a result, the 
average South American, East Indian or Australian 
business man of consequence knows Europe as he 
has never known the United States. This acquaint- 
ance, which is so important a factor in trade, was 
in large part the direct result of the existence of 
fast passenger steamships which lessened the 
tedium of a necessarily long sea voyage for those 
who wished to visit other lands. 

Fast passenger lines have another decided com- 
mercial advantage. They make it easier for the 
industrial leaders of manufacturing countries to 
visit foreign markets and investigate conditions for 
themselves. Many a prosperous export business has 
originated in a pleasure trip through South America 
by the head of an American manufacturing firm. A 
good business man who has visited Buenos Aires, 
Valparaiso or Eio Janeiro can never again be con- 
vinced that he cannot enter into direct relations with 
the importers of these cities with a minimum of risk. 
We want more of our manufacturers to visit overseas 
markets that they also may see and believe. 

Another advantage, by no means inconsiderable, 
of fast passenger lines is the obvious fact that they 
greatly facilitate selling trips. Under the conditions 
that existed previous to 1914, American overseas 
salesmen were obliged to waste entirely too much 



166 AMERICAN METHODS IN FOREIGN TRADE 

time waiting for steamers to sail and for them to 
get somewhere after sailing. Many of our manu- 
facturers have hesitated to send a high-salaried 
man to certain markets because of this handicap. 

The importance of a fast international mail 
service seems very obvious. The loss of time and 
the necessarily high degree of prevision exercised 
by both buyer and seller, owing to the infrequency 
and slowness of mail steamers, has been a great 
obstacle to our manufacturers in their endeavor to 
compete in foreign markets whose contact with 
European sources of supply was more intimate 
though they are fully as remote geographically. 
Correspondence is the life blood of business and 
commercial aenemia is a certain result if its circula- 
tion is sluggish. 

Frequency of freight steamship sailings and a 
cutting down of the time required to reach im- 
portant foreign ports of entry are imperative 
necessities to the highest development of our world 
trade. As we have seen in preceding chapters the 
overseas merchant is forced by circumstances to 
estimate the requirements of his business and place 
very heavy orders far in advance of actual needs 
in order to be sure of having an adequate stock on 
hand at all times. The fewer the voyages made 
and the slower the sailing time of the freight ships 
which connect him with his sources of supply, the 
greater the handicaps under which he works. 

Faster freight lines between the United States 
and foreign markets will, by increase of annual 
turnover, reduce the overseas buyer's risk and 
greatly augment the usefulness of his capital. The. 



THE AMERICAN MERCHANT MARINE 167 

oftener deliveries can be made and moved on to the 
ultimate consumer, the greater each importer's buy- 
ing power and consequent value as a distributor of 
American goods. 

The need therefore of an American merchant 
marine depends largely on whether its development 
and maintenance will accomplish certain definite 
ends. To be a practical success it must be the means 
of promoting a better understanding between us, 
and the people we do business with, by facilitating 
intercourse in person and by mail, and it should 
effect economies in time and money, which will make 
it worth more to us and our foreign customers than 
any service that has previously existed. 

Whether American steamship lines can accom- 
plish these things under government ownership while 
the stimulus to public service provided by the 
existence of a national peril does not exist is, in the 
opinion of the writer, open to some doubt. The 
field appears to offer great opportunities for that 
initiative which seems, under normal circumstances, 
to be peculiar to private management for profit. 
Whatever our feeling as to this, however, let us 
advocate what we believe in, intelligently and 
sanely. 

A great foreign trade is an easily demon- 
strated advantage to all American taxpayers. We 
must convince them of this and keep them con- 
vinced to retain our new merchant marine, either 
under public or private ownership. For govern- 
ment-owned lines must, for a time at least, run at 
a loss and private capital will never enter this field 
in a large way without government guarantees of 



168 AMERICAN METHODS IN FOREIGN TRADE 

some sort. In either event, the people must pay 
and pay they will if we give our legislators some 
sound businesslike basis on which to go before those 
from whom all their power is derived. 



CHAPTER XXX 

RECIPROCITY TREATIES AND PREFEREN- 
TIAL TARIFFS 

A kecipkocity treaty is an agreement between two 
governments, the terms of which provide that cer- 
tain specified products of each are to be admitted 
into the other reciprocally at a rate of duty lower 
than that which must be paid on the same articles 
when they originate elsewhere. It is a " scratch 
each others' back" arrangement between two 
nations. 

A preferential tariff is a lowering of some or all 
import duties by one government on some or all 
of the products of another country either in con- 
sideration of similar reciprocal action, or for any 
other reason. A reciprocity treaty is the simul- 
taneous and mutual adoption of preferential tariffs 
by two countries as a result of diplomatic negotia- 
tion and convention afterward sanctioned by legis- 
lative action. 

For example, the United States some years ago 
attempted to negotiate a reciprocity treaty with 
Canada by the terms of which agricultural products 
of the Dominion were to be allowed to enter this 
country duty free in consideration of similar favor 
being extended to imports of certain of our manu- 
factured products. 

169 



170 AMERICAN METHODS IN FOREIGN TRADE 

England enjoys preferential tariffs in Australia 
and other colonies in consideration of the protection 
afforded by the Imperial Government and their 
freedom from certain financial burdens which most 
self-governing communities usually bear. 

The United States, in consideration of its large 
consumption of Brazilian coffee, enjoys in that coun- 
try a preferential tariff on pianos and certain other 
manufactured articles. 

The theory of reciprocity treaties and preferen- 
tial tariff arrangements is that by lowering the cost 
to the consumer of the articles specified in them, 
a wider market for these goods is thereby created. 

Among American export men it is difficult to find 
ardent advocates of these trade-fostering devices. 
During many years of constant activity in export 
circles and of faithful attendance at all important 
gatherings for the exchange of ideas on foreign 
trade, the writer cannot recall having heard one 
practical and intelligent plea for such supposed 
assistance in overseas selling. 

The chief reason for this is undoubtedly, that the 
experienced export manager has not, in the course 
of his selling work, felt any great need of such 
adventitious aid. As so repeatedly stated previ- 
ously, American manufactured goods sell on 
their merits and not because they can be bought at 
a lower price than others of their kind. Therefore, 
the existence of a preferential tariff on any one 
line of American goods results chiefly in a small 
saving to the ultimate purchaser on an article that 
he probably would have bought anyhow and in a 



RECIPROCITY TREATIES 171 

corresponding incidental loss of revenue to his 
government. 

In these days of fast steamships, the chief ob- 
stacles to the development of foreign trade are 
those due to the existence of political boundaries 
and of variations in laws, customs, language, taste 
and other institutions and characteristics which dis- 
tinguish each nation from all others. The success- 
ful exporter is he who surmounts the natural and 
artificial barriers of nationality — he whose adapta- 
bility and skill make them, for all his practical 
purposes, non-existent. All trade nationalizing 
devices such as reciprocity treaties, national trade- 
marks and special legislation like the Webb- 
Pomerene Act tend to widen the gulfs between peo- 
ples which the individual exporter is constantly en- 
deavoring to bridge so far as his own distribution 
is concerned. 

A fair field and no favor is all that American 
goods ask or need in world trade. To our national 
sense of fair play, there is something just a little 
distasteful in the idea of trying to persuade a 
foreign government to give us certain advantages 
in their market that others are not granted. It 
isn't playing the game. Besides it is likely to estab- 
lish dangerous precedents and lead to diplomatic 
competition for similar favors with much resulting 
ill-will. 

There is very little difference between the theory 
of reciprocity and that of securing preferential rail- 
road rates. If it is unjust to allow an oil producer 
to make an arrangement for more favorable rail- 



172 AMERICAN METHODS IN FOREIGN TRADE 

road rates than his competitors enjoy, how can it 
be right for one nation to persuade another to grant 
special privileges for their business men to the sup- 
posed detriment of all others? 

Because the action is taken by nations instead of 
individuals does not alter the essential injustice of 
such a proceeding. A decent respect for the opinion 
of the business world forbids the employment of 
such methods internationally as well as intranation- 
ally. It was to make certain governments conform 
to recognized standards of morality and humanity, 
that we entered the World War. Shall we then 
give countenance to the idea that it is right for the 
state to do for its citizens as distinguished from the 
peoples of other lands, what individuals should not 
be allowed to do for themselves and against other 
individuals ? 

This line of reasoning does not of course apply 
with equal force to arrangements between a mother 
country and its colonies whose relations partake of 
the nature of those that unite the political units 
that make up a single state. In our theories of 
correct procedure for nations we are, however, 
gradually recognizing more and more the inter- 
dependence of all peoples of the world and as it is 
given us to see this with greater clarity, the in- 
terests of separate communities lose their aspect of 
sanctity in the eyes of right-thinking men who seek 
the common good of all. 



CHAPTEE XXXI 

AMERICA'S PREEMINENCE IN 
SALESMANSHIP 

Few of the European makers of manufactured 
articles do their own selling. In practically every 
instance in all lines, the manufacturer relies for his 
distribution on one or more independent intermedi- 
aries who correspond roughly to our jobbers though 
at times their function approximates that of our 
manufacturer's selling agents. 

These great distributing houses, many of which 
have branches or agents all over the world, have no 
special interest beyond the immediate profit to be 
made in promoting the demand for any one prod- 
uct. Their tendency is to handle the lines that 
are in greatest demand without regard to the wel- 
fare of users or the future of any one manufacturer. 

In other words, the inclination of the maker to 
go beyond the middleman and establish and pro- 
mote consumer demand for his particular brand of 
products, which has been so important a factor in 
our commercial development, has never exhibited 
itself generally in the Old World. It is practically 
impossible to find throughout the length and breadth 
of Europe anything that corresponds closely to our 
highly organized sales and advertising depart- 
ments, with their specially trained executives who 

173 



174 AMERICAN METHODS IN FOREIGN TRADE 

single-mindedly give the best there is in them to 
the simultaneous upbuilding of a demand for each 
maker's line and a distributing machine to take care 
of this demand. 

Out of this great fundamental difference in 
distribution policy spring all the minor character- 
istics that distinguish American foreign selling 
methods from these of Europe. 

There is no sharp line drawn between domestic 
and foreign business by the manufacturers or mer- 
chants of the Old World. The goods are sold to great 
trading houses that resell at home or abroad as they 
see fit. Export has always been an important part 
of the trade of European makers who naturally 
leave foreign markets to their distributors because 
they have no motive for not doing so. In fact, 
there probably is no good reason, for as long as 
they do not do their own selling anyhow, they do 
well to leave all distribution in the hands of those 
who know their line and are familiar with world 
trade requirements. 

The American manufacturer who has made a 
great success in overseas trade is almost invariably 
one who, having well-organized and ably-managed 
sales and advertising departments, proceeded to 
adapt his domestic distributing methods to foreign 
markets. The general sales manager, in co-operation 
with the advertising manager, plans his domestic 
selling campaigns not alone with an eye on the 
immediate profit but with the systematic upbuild- 
ing of distribution and good will also in view. So 
the American export manager, trained in the same 
school and similarly acknowledging allegiance to 



AMERICA'S PREEMINENCE 175 

but one line of goods in which he has confidence 
and on whose successful marketing depends his 
own advancement, adheres to the underlying prin- 
ciples of his firm's policy in every country that he 
enters. 

This explains the significant fact that not one 
American manufacturer of highly elaborated goods 
who still cleaves to strictly jobber methods of 
distribution, has ever obtained any noteworthy re- 
sults in overseas selling. It may even be said that 
our failure to get our fair share of foreign trade 
in many lines is primarily due to the prevalence of 
outworn ideas of selling among the makers of these 
products. We cannot job goods for export with 
any great degree of success for by so doing we 
meet our competitors on their own price-competi- 
tion basis where they have all the advantage. 

By adapting the sales department idea to over- 
seas selling, we have gained for ourselves all of 
the advantages that it yields at home. Our export- 
ing manufacturers are close to the ultimate con- 
sumer everywhere and their agents and distributors 
feel themselves to be highly-valued parts of an 
organization which not only has confidence in its 
special products but is constantly on the alert to 
help their business associates to greater prosperity 
and independence. 

For our exporting manufacturers, keeping control 
as they do of the distribution of their products, are 
enabled to accomplish much that European makers 
cannot even attempt. All the refinements of dealer 
helps such as general publicity, circularizing, store 
demonstration, money back guarantees, educa- 



176 AMERICAN METHODS IN FOREIGN TRADE 

tional work in merchandizing and all the other 
forms of co-operation with which our domestic 
selling has made us familiar, can be carried out 
with great advantage to all concerned. 

Why, it may be asked, cannot the great trading 
houses of Europe do these things for their manu- 
facturers? There are many reasons. 

First, it is not in human nature to spend money 
to build up something for another. These firms 
advertise and do many things to promote sales, but 
they do them for themselves. No one else can or 
will do for a manufacturer what he should do for 
himself. 

Second, no great trading house, handling thou- 
sands of lines, can develop anything resembling an 
American sales department for each of them. The 
best it can do is to handle products in groups, which 
is not much better for the individual manufacturer. 

Third, there is no money to work with. The man- 
ufacturer, schooled above all to meet price com- 
petition, sells to the trading companies at a figure 
which does not allow for individual sales promotion 
for his line and, as the trading company is not in 
a position to demonstrate the superiority of any 
one line over another and thus get more for it, it also 
must meet price competition. The profit allows for 
general selling and overhead expenses but offers 
no margin for special work on individual products. 

Fourth, the European lacks a sufficient acquaint- 
ance with the selling methods which are a part of 
the very air that American business men breathe 
from the time that they take their first positions. 
Not only do they not understand these methods but 



AMERICA'S PREEMINENCE 177 

few of them would use them if they could. They 
have gone on all their lives doing things in their 
own way and surrounded as they are by the Old 
World atmosphere of conservatism, they will con- 
tinue to do so until our inroads into their trade 
force them into other paths. 

One of the most important respects in which our 
foreign trade differs from that of Europe is in the 
fact that the organizations of many of our manu- 
facturers reflect an individual business policy that 
distinguishes them from all others and when they 
enter overseas markets, they carry this with them. 
Thus they work in a favorable atmosphere which 
they themselves create and the names of their 
products become synonymous with various desirable 
attributes in the minds of all who use them. This 
is a great asset of direct exporting which is denied 
the European manufacturer who lacks contact with 
his trade and his consuming public. 

A great weakness of the position of European 
manufacturers in world trade is the fact that the 
commerce of their countries is largely based on the 
erroneous assumption that a pair of shoes in the 
eyes of the user is a pair of shoes and nothing more. 
They depend too much on the attractions of low 
price and easy terms and not enough on the demon- 
strated fact that everyone who buys a recognizable 
brand of goods and like it will, in nine cases out 
of ten, pay more money to continue to get the article 
which to him has a proven value. 

American manufacturers who cannot or will not 
do their own selling should keep out of foreign 
markets or refrain from assuming any great risk 



178 AMERICAN METHODS IN FOREIGN TRADE 

in entering them for they will do so under a handicap. 
Those who have built up a profitable domestic de- 
mand for a trademarked line by the efforts of their 
own sales and advertising departments, should lose 
no time in duplicating abroad the work they are 
doing at home along the lines laid down in previous 
chapters. They will find a fertile field for these 
activities and will contribute something substantial 
and enduring to that ever-growing monument to 
American executive efficiency, the foreign trade of 
the United States. 



CHAPTER XXXII 

THE PROTECTIVE TARIFF AND FOREIGN 

TRADE 

Thebe is, among American manufacturers, much 
adherence to pre-conceived and inherited ideas re- 
garding the protective tariff principle. Now that we 
must become a nation of world traders, it seems 
worth while to review the whole matter from an in- 
ternational point of view, set forth for the benefit of 
all what the experience of our exporters has demon- 
strated and draw some general conclusions as to 
what should guide us in our tariff making. 

The hearings held by legislative committees to 
which this question has in the past been referred by 
the Congress have seldom or never covered all the 
ground that they should. Much testimony relating 
to the competitive conditions that affect production 
costs has always been taken. In these latter days, 
however, the making of goods has constituted but a 
part of the manufacturer's problem. How products 
are sold has a very important bearing on the ques- 
tion of protection and deserves careful considera- 
tion if we are to arrive at sound decisions. 

When, directly after the Civil War, there began an 
agitation for a tariff designed to protect the new in- 
dustries that had sprung up in this country, we were 
of all peoples in the world the least capable mer- 

179 



180 AMERICAN METHODS IN FOREIGN TRADE 

chandizers. Such manufactured goods as we then 
made had sold chiefly because the public could get 
no imported substitutes for them. The war had 
for the time being crippled trans-Atlantic trans- 
portation. 

With the resumption of international commercial 
relations it seemed as if our inexperienced manufac- 
turers would quickly be ruined by the competition of 
the long established makers of Europe who, for rea- 
sons that are not important for the purposes of this 
discussion, had advantages in production and who, 
owing to the long acquaintance of their sales repre- 
sentatives with the distributing methods then in use, 
were on this account even more threatening as rivals 
in our home market. Probably the tariff policy that 
then found favor was the only practical means of 
avoiding disaster. 

So we adopted protection as a temporary ex- 
pedient with the idea that, when it was no longer 
needed, it could be discarded. Sheltered from for- 
eign competition by a legislative barrier, our manu- 
facturers prospered and rapidly increased in num- 
bers — so rapidly that it brought about a develop- 
ment the great significance of which has never 
received due attention from either the advocates or 
opponents of a high tariff. 

The rapid growth of our country and the con- 
stantly increasing demand for manufactured prod- 
ucts that resulted led to intense competition among 
American makers within the tariff wall. Soon the 
older firms, having improved their manufacturing 
processes and gained prestige in their field, began to 
talk quality instead of price. The jobber was often 



THE PROTECTIVE TARIFF 181 

superseded by the able sales manager with his highly 
organized force of trained helpers ; the drummer of 
song and story gradually passed on to make way for 
the salesman; and the advertising manager began 
to prove that there were better ways to propagate 
the ideals of his firm than slapping merchants on 
the back, telling them stories, bribing them with 
dinners and cigars or dazzling them with glittering 
raiment that was the talk of the town for months. 

Today the United States leads the world in scien- 
tific salesmanship. Many American manufacturers 
have for years been able to thrive on price competi- 
tion at home and abroad because they have dis- 
covered the consumer and learned how to make him 
want their particular products and because they have 
found out how to make better and more prosperous 
business men of the dealers who carry their lines. 
They first learned to meet in the home market the 
rivalry that originated around the corner and then 
went out into the rest of the world and vanquished 
or held their own with the European bugaboos. 

Surely these manufacturers do not need and 
could not justly ask for protection. Perhaps others 
in the same lines whose products are poorly made, 
lack distinction and are sold through jobbers or 
otherwise to the few who do not care what they 
buy so long as it costs little, may demonstrate their 
individual need of help, though their right to it rests 
on dubious grounds. Just how far we should go to 
shield the admittedly weak from the consequences 
or their own incapacity, is manifestly open to some 
debate from social and economic viewpoints. If 
most of our infant industries in any given line have 



182 AMERICAN METHODS IN FOREIGN TRADE 

outgrown their swaddling clothes and pap, how much 
of an asset are the remainder who have proved them- 
selves incapable of similar development? Even the 
most ignorant farmer will tire of feeding runts 
whose chief characteristic seems to be the ability 
to assimilate nourishment without contributing the 
share to the pork barrel that the rest of the litter 
can and does. 

This of course applies only to makers of highly 
elaborated products which possess individuality in 
the eyes of the consumer. When we consider the 
producers of staple or standardized products the 
problem is altogether different, for, as elsewhere 
shown, such lines cannot achieve peculiar distinction 
with the public. No dealer or user cares very much 
where his steel plates, pine boards, or chemicals 
come from as long as they are up to specifications 
and he gets them as needed. Such articles must 
always meet price competition and delivery require- 
ments by the development of suitable producing and 
distributing facilities. When they are able to hold 
their own in world markets on this basis, they ob- 
viously need no help at home. Until it is thoroughly 
demonstrated that they can do this, they must be 
protected not only for their own sake or for the sake 
of our country, but also for that of the whole 
civilized world. It is manifestly bad not to encour- 
age and help the growth of all producing facilities 
that really serve human needs. 

All of the foregoing refers of course to a tariff for 
protection. It does not apply to purely revenue 
measures which instead of aiming to discourage im- 
ports, are theoretically designed to tax them below 



THE PROTECTIVE TARIFF 183 

the point where the law of diminishing returns 
begins to operate. 

Now that the foreign trade of our country is a 
bread and butter matter to the Man in the Street, 
we cannot exercise too much care in applying the 
admittedly useful principle of tariff protection. In- 
ternational commerce, which is simply the exchange 
of the surplus products of one country for those of 
others, is a reciprocal institution which is highly 
sensitive to interference with the economic laws on 
which its operations are based. Our market in any 
foreign land cannot but be affected adversely by 
unnecessary barriers erected against the flow of its 
products into the United States. We must not un- 
duly limit our importation of the best and most dis- 
tinctive foreign-made products, for by so doing we 
shall surely restrict the distribution of our quality 
goods. There must be no manifest unfairness to 
other peoples for it invariably leads to strained 
political and economic relations. 

Unmerited protection has, from a world-trade 
viewpoint, a very serious effect on our factory or- 
ganizations. Just as large unearned incomes make 
for extravagance in the individual, so the undeserved 
relief of any one group of our manufacturers from 
the necessity of meeting foreign competition in our 
great home market operates against the develop- 
ment of the highest standards of efficient production. 
This in turn tends to limit our possibilities in for- 
eign trade. It is evident that, in spite of the su- 
periority of our selling methods, we cannot with im- 
punity lag behind the rest of the world in our ability 
to make good products at a fair price, for to do this 



184 AMERICAN METHODS IN FOREIGN TRADE 

would deprive us of our all important selling argu- 
ment — quality. 

How to draw the line between deserved and un- 
deserved protection is admittedly a difficult matter. 
As stated in the first paragraph of this chapter, 
many of our manufacturers have not an open mind 
on the subject, either because of ideas inherited from 
past generations when conditions were very differ- 
ent or because of long and obstinate adherence to 
faulty conclusions drawn from experience, such as, 
for instance, the attributing of individual success in 
large part to a high tariff policy when as a matter of 
fact it is often due to unusual executive ability which 
would normally protect its possessor anywhere at 
home or abroad. 

Our manufacturers are not therefore always to be 
regarded as reliable guides, entirely aside from any 
question of self interest. Probably the degree of 
success in world trade attained by any one line of 
industry which is apparently out of the "infant" 
class, offers an accurate indication of the extent and 
duration of the protection to which those engaged 
in it are entitled. For the political spell binder's 
theory of industrial prosperity based on a high range 
of prices at home to enable our manufacturers to 
dump their surplus products abroad, at a loss if 
necessary, has not stood the test of time. Foreign 
importers are not job lot specialists but highly effi- 
cient distributors of goods which the people of their 
countries buy not because they are chronic bargain 
hunters but mainly for the reason that they want or 
need the goods, and, like all other human beings in 



THE PROTECTIVE TARIFF 185 

these circumstances, can be persuaded to pay a fair 
price for them. 

It may not be out of place here to point out that 
the fears that Germany would, when peace came, 
demoralize world trade by dumping on foreign mar- 
kets, at very low prices, her supposed accumulation 
of manufactured products, were groundless. They 
had no real foundation not only because no con- 
siderable hoard of this kind existed but for the 
far better reason that, had German industry been 
able to do much more than meet the demand for war 
materials, any such unconsumed excess would have 
been but a small drop in the very large bucket of a 
world that was sorely in need of goods to keep the 
machinery of distribution going and to satisfy the 
pressing requirements of all peoples. In normal 
times dumping might have a temporarily bad effect 
on business but that it can be of any permanent 
benefit to a nation that is desperate enough to re- 
sort to such a practice, our own experience in for- 
eign trade disproves beyond all question. 

The protection of newly established industries 
should receive the most careful consideration. That 
they make a start at all may usually be regarded as 
evidence of their prospective usefulness to society. 
To leave them unaided to struggle through the vicis- 
situdes of the early years unsheltered from the at- 
tacks of their vigorous foreign competitors is 
scarcely a service to our country or, for that matter, 
to the world at large. 

It is unfortunate that, in the heat of the political 
campaigns of past generations, our manufacturers 



186 AMERICAN METHODS IN FOREIGN TRADE 

were so repeatedly and so convincingly told that 
they could not contend with foreign producers on 
even terms. Long reiterated suggestion has a pow- 
erful influence on the human mind and many of 
our makers who should now be in an invincible posi- 
tion in world trade persist in believing that they can- 
not successfully enter the field. In spite of the fact 
that they have for years known how to meet the 
domestic rivalry of other American makers of 
similar but cheaper and inferior lines, they have a 
fear " complex' ' where foreign competition is con- 
cerned. There is, however, nothing quite so reassur- 
ing as a demonstrated fact and this feeling is gradu- 
ally disappearing under the corrective influence of 
those who, in their endeavors to spread the light, 
keep calling attention to the successes of other 
American manufacturers whose products enjoy a 
world-wide demand at profitable prices. 



CHAPTER XXXIII 
GERMAN COMPETITION 

Since the founding of the Empire, the foreign 
trade of Germany has been an anachronism. The 
modern conception of commerce, intranational and 
international, is the mutually advantageous ex- 
change of excess products between individuals or 
communities. 

When primeval man wanted something that 
another possessed, he took it by force or did with- 
out it. The development of the tribe as a social 
institution brought a realization of the desirability 
of maintaining property rights and he who needed 
what belonged to his neighbor had to exchange for 
it something that that neighbor wanted or some- 
thing which by general agreement or official decree 
had a recognized value to all members of his tribe, 
so that with it the seller might later barter with 
others. Such were the beginnings of trade and such 
was the origin of money. 

That this did not necessarily mark the awakening 
of the modern spirit of justice and humanity is 
shown by the fact that between tribes the only ex- 
change that existed was robbery for which those 
despoiled exacted the highest possible toll in blood 
and bided their time to retake what they had lost 
or its equivalent, The first intratribal recognition 

187 



188 AMERICAN METHODS IN FOREIGN TRADE 

of property rights was purely an expedient and out 
of it "were gradually evolved our standards of jus- 
tice. It remained for modern civilization to apply 
the abstract principles of right and wrong to all 
humanity. It was not till a few intrepid men 
pledged their lives and their sacred honor to the 
maintenance of the principle that all men are 
created free and equal and succeeded in upholding 
their contention, that international commercial ex- 
change began to lose its aspect, if not of robbery, 
at least of unfair exploitation of weaker peoples by 
those who, by inheritance, environment or natural 
endowment, were stronger. 

An autocracy is a glorified tribe. The autocratic 
spirit is essentially tribal. Under this antiquated 
form of government might makes right interna- 
tionally. Expediency still demands that between 
fellow-tribesmen, something approximating justice 
should be maintained, for on the cohesion of the 
tribe depends the autocrats power. His subjects 
are, however, bred in the belief that they are men 
of superior worth whose duty it is to enhance the 
prestige of their tribe by carrying the blessings of 
its institutions to a benighted humanity and whose 
right it is to acquire, with the greatest possible 
advantage to themselves, the outlander's posses- 
sions. 

History is full of examples of autocracy's spolia- 
tion and exploitation of other peoples. The policy 
of economic oppression that the autocratic England 
of a century ago adopted in ruling its American 
colonies started a school of political thought that 
brought the United States into being, swept through 



GERMAN COMPETITION 189 

the New World like an epidemic and, invading 
Europe, forced on the descendants of George III 
himself, a recognition of certain inalienable human 
rights. 

The autocratic rulers of Spain under the pretense 
of carrying the spirit of its official Christianity to 
less-favored peoples, so despoiled and oppressed its 
American colonies that today not one remains to 
her. 

France, Holland and Portugal under the rule of 
absolute monarchs pursued much the same course 
and with very similar results. In every case the 
tribal spirit, exalted by wealth and power, worked 
the undoing of those who controlled and directed 
the dangerous forces that destiny had placed at 
their disposal. Country after country has thrown 
off autocracy's yoke and joined the ranks of the 
ever-growing forces of democracy. 

Throughout the generations that incubated and 
nourished the spirit of democracy, there existed in 
Central Europe a group of racially related but 
politically independent tribes, each jealous of the 
others and no one of them strong enough to dom- 
inate all. Such were the German States till the 
genius of Bismarck brought them under the rule of 
his tribe, welded them into an empire and vested 
its control in the person of the Prussian hereditary 
ruler. Thus there came into being almost over night 
a powerful autocracy in a world that had journeyed 
so far on the road to complete democratization that 
it could not believe that there existed in its midst a 
strong and able government whose rulers, disre- 
garding the lessons of history, would later on at- 



190 AMERICAN METHODS IN FOREIGN TRADE 

tempt to force on all humanity their political, social 
and commercial institutions. 

Imperial Germany came into being at a time when 
the chief opportunity to acquire political colonies 
had passed. She took what she could in Africa 
but devoted most of her attention to what may be 
called commercial colonization. Her citizens emi- 
grated, not to become a part of foreign bodies 
politic, but to remain always German, holding all 
that they could acquire not in a spirit of co-opera- 
tion with those whose existence all about them 
made these holdings valuable, but selfishly as men 
of a superior race whose minds were permeated 
with that peculiar tribal philosophy called Kultur. 
The German trader in South America, because it 
was expedient to disguise himself as an industrious 
and law-abiding business man, was not on that ac- 
count any less a bigoted zealot than was Pizzaro, 
whom circumstances permitted greater freedom of 
action. 

The industrial democrat does not believe in em- 
ploying force to foster the material welfare of 
himself or his country. It is his conviction that 
anything built up on such a basis is insecure. He 
feels that, just as government to be enduring must 
rest on the consent of the governed, so the distribu- 
tion of his product must, to be worth while, depend 
on goodwill — on the satisfaction of the great mass 
of those who use it. When someone comes along 
and tries to convince them that another product is 
better, he fights but he fights intellectually. He 
grapples with the problems of lowering production 
costs and of salesmanship. He knows that if he is 



GERMAN COMPETITION 191 

beaten by bis own fair methods, be must accept 
business defeat as gracefully as be acquiesces in tbe 
will of the majority in his government. 

The illuminating rays of such a commercial philos- 
ophy never penetrated the German mind during the 
days of the Empire. Trade was looked upon as 
something that they must go out and take instead 
of winning it by methods which all right-minded 
men must regard as fair. German business men re- 
lied on trust methods of production and distribution, 
that is, methods involving unfair restraint, for there 
can be no valid objection to large-scale operations 
justly conducted. They imitated the popular prod- 
ucts of other lands and foisted them on users for 
' what they were not. They established foreign banks 
and used them as clubs on buying houses and as com- 
mercial spies. They acquired control of foreign firms, 
institutions and facilities and by this means forced 
advantages for themselves and their compatriots. 
They compelled the use of their goods in many lands 
by the old device of liens on crops, thus fostering 
improvidence rather than frugality. 

These and similar methods, all breathing the tribal 
spirit and used with discretion to meet varying 
conditions, resulted in the upbuilding in every coun- 
try of an enormous trade and the accumulation of 
great wealth, but nowhere was the distribution of 
German goods allowed to depend on the goodwill 
of foreign distributors or consumers. Branch 
houses, German in fact and usually in name, Ger- 
man banks and German corporations formed under 
the provisions of the laws of each country, every- 
where worked for the home land, hand in hand with 



192 AMERICAN METHODS IN FOREIGN TRADE 

its diplomats and spies, between which latter there 
seems to have been a distinction in name only. 
Never was there more than a pretense of en- 
lightened interest in the communities they exploited 
or of loyalty to other than German institutions. 
The Kaiser had a strong commercial colony in every 
foreign country which he secretly ruled as truly 
as if it were a part of the fatherland in fact as well 
as in spirit. 

That part of the German Empire which existed 
in the hearts of its expatriated property-owning sub- 
jects has never been portrayed on any map available 
to the public. The Allied belligerents traced 
many of its ramifications and destroyed some of its 
power within their own bodies politic but every-* 
where else its physical and psychological holdings 
remained intact awaiting the coming of the hoped- 
for victorious German peace. 

The existence of such an alien domain with 
great resources so devoted to a foreign govern- 
ment that the only guide to its conduct is a discreet 
but none the less zealous interest in the home land, 
was a constant threat against the political and eco- 
nomic independence of each country so invaded and, 
as a whole, a menace to civilization. Either the 
world had to be made safe for democracy, political 
and commercial, or become a part of the German 
tribe. 

For it is no secret that had Germany succeeded 
in her attempt at military domination, the result 
would have been the extension and intensification of 
her economic penetration in countries not directly 
ruled from Berlin. The magnitude of this disaster 



GERMAN COMPETITION 193 

would have been immeasurable from the point of 
yiew of free men. Only if England, France, Italy and 
the United States, separately or in combination, had 
then fought the German idea with its own com- 
mercial weapons, would it have been possible to 
build up the strength they would surely have re- 
quired to meet another military onslaught. Whether 
these weapons could have been well fashioned and 
effectively used by countries with democratic in- 
stitutions is doubtful, for commercial colonization is 
possible only under a highly centralized form of 
government. To wage a military fight against 
autocracy the Governments of the Allied powers 
themselves had to become, for the time being, auto- 
cratic and it is difficult to believe that any thorough- 
going imitation of German trade methods would 
have been possible for them without the further sus- 
pension if not the permanent loss of individual 
liberties. 

Germany, however, did not win. The entire re- 
sources of democracy were pledged not only to her 
military defeat but to her political decentralization. 
The degree to which her government is in time 
democratized will determine the extent to which she 
can follow her pre-war trade policy. It is certain, 
however, that with any considerable degree of 
decentralization, her grandiose scheme of a military 
control of all industry with its workers enlisted for 
life goes by the boards. The beaten German people 
will not, if they have an effective voice, submit to fur- 
ther extension of the military idea. Nor will the 
Allied governments, after limiting its political use, 
permit it to invade the industrial field. 



194 AMERICAN METHODS IN FOREIGN TRADE 

The only possible insurance against the resump- 
tion of German commercial frightfulness was to 
break her war machine and impose terms of peace 
that would not only prevent a return of military 
frightfulness but would also absolutely prohibit the 
evil trade practices so menacing to the liberties of 
all men. Any other victory would have been in- 
complete. Without her commercial colonization 
Germany could never have built up her military 
machine. A return to this policy would inevitably 
have bred another world crisis. 

Hence the folly of attempting to formulate plans 
for meeting German competition on its own ground. 
We could not have done it successfully for we are 
not a tribe. Democratic institutions are inimical 
to the tribal spirit and must prevail over it or be 
sacrificed to it. We desire no commercial colonies. 
We want our precious liberties and we want others 
to be secure in the possession of theirs, both because 
they are as much entitled to them as we are to ours 
and because to attack or curtail them would be to 
undermine the whole structure of free government. 

American manufacturers had no difficulty in 
meeting German competition during the pre-war 
period. Their products were honestly made and 
they did business with all due regard for the other 
man's welfare. They depended on good will, not on 
force. If our future exporters will go on doing 
what our pioneers have so well done, there need 
be no fear of German competition in the future. 

A temporarily victorious Germany would have 
returned to the path she followed before the war 
until overcome by the inevitable and irresistible 



GERMAN COMPETITION 195 

reaction of human nature against the political and 
commercial overlordship of a tribe. The Germany 
now in existence after the military defeat is 
a decentralized mass of humanity forced to 
abandon the only methods with which they have 
been familiar and destined in the main to grope for 
years in an unknown world till the ability of their 
democratic leaders finds for them a way out of the 
trackless waste into which their tribal rulers have 
led them. 



L'ENVOI 

In spite of the Kaiser's dreams of world con- 
quest, in spite of submarines and Zeppelins, in 
spite of German poisonous gases and German- 
poisoned minds, in spite of the scars that will long 
show where the most savage onslaught of all time 
hammered against the living defenses of our civiliza- 
tion — Humanity, invincible and inviolable, emerged 
triumphant. Having stamped out the conflagration 
whose heat was in our very faces night and day, 
we resume the path that we were following when the 
alarm was sounded. 

Refined by our trial, but still the same in human 
attributes, we must go on inhabiting a world un- 
changed except by the improvement due to our re- 
finement. Our energies again turn to field, mine 
and factory. Each of us, producing what others 
need, exchange it for what we require, and that is 
commerce. No dislocation, however severe, of the 
machinery of production and trade, could ever per- 
manently check human progress. 

In the midst of a great catastrophe only a few 
minds rise above the welter of blood and death and 
continuously recognize the eternal vitality of 
human institutions. Too many are the slaves of 
what has been. Too few recognize the present, 
whatever its aspect, as but one stage in our in- 
evitable rise to higher development. 

196 



VENVOI 197 

The sick man cannot remember how it felt to be 
well, but the convalescent speedily forgets the pain 
he has endured. A sick humanity is on the road 
to its accustomed health if each of us but does his 
part with all the fairness, intelligence and energy 
with which he is endowed. 



THE END 



INDEX 



PAGE 

Acquaintance as a Factor in Foreign Trade. 154, 164, 165 

Adaptation of Products to Markets 5, 6 

Adjustments with Foreign Buyers 34, 51 

Advertising Abroad, Street Car and Out-door 97, 98 

Advertising Agents, General Publicity through 97 

Advertising Combined with Circularizing 68, 73 

Advertising for Foreign Trade 61, 62, 63, 68 

Advertising Heavy Machinery 121 

Advertising in Local Papers Abroad 61 

Advertising Media Abroad, Character and Circulation of 99, 100 

Advice sometimes Dangerous 5, 46, 76, 126 

"American Atmosphere" in Foreign Markets 84 

American Banks Abroad 151-155 

American Export Failures 14, 33 

American Methods, Importance of Following 10 

Americanism in Foreign Trade 32, 45, 153, 154 

Boycotts of Imported Goods 138, 139 

Cables, the Use of 35 

Catalogs, Export 75-79 

Catalogs, Language of 77, 78, 79 

Catalogs, Translation of 7g 

Circularizing Combined with Advertising 68, 73 

Circularizing Export Commission Houses 67 

Circularizing for Heavy Machinery 121 

Circularizing in Foreign Trade 61, 62, 65-69 

Circularizing to Secure Agents 66, 67 

Circularizing under Exclusive Agency Plan 90 

Circulars, Preparation of 65 

Colonization, Commercial 190, 191, 192 

199 



200 INDEX 

PAGE 

Combinations in Foreign Trade 10, 16, 61, 122 

Commercial Colonization, German 190, 191, 192 

Competition on Price 5, 18, 19, 58, 181 

Complaints from Foreign Buyers, How to Handle 93 

Cooperating with Distributors 50, 51, 53, 54, 59, 60, 89-94, 175 

Cooperating with Distributors under General Merchandizing 

Plan 90, 91, 92, 93 

Cooperating with Exclusive Agents 89, 90 

Correspondence, How to Handle 102, 113-118 

Correspondence, Neglect of 73 

Correspondence, Translation of 114, 115 

Credit as the Merchant's Right 103 

Credit Extension a Gradual Development 106. 107 

Credit Information, Securing 101, 102, 109, 115 

Credit Losses, Percentage of Foreign 105, 110 

Credit Managers in Foreign Trade 104 

Credit, Necessity of Extending 102, 103 

Credit to Machinery Buyers, Form of 103, 120 

Credits as a Competitive Weapon 6 

Credits, Demoralization by Extension of Unwarranted 7 

Credits, Foreign 101-107 

Credits, German Misuse of 4 

Credits, How Extended 105 

Credits, Passing on Foreign 104, 109, 110 

Credits, Safety of Foreign 101 

Credits, the Real Function of 6 

Criticism, Need for Constructive 128-132 

Department of Commerce, a Suggestion for 147-150 

Direct Exporting Distinctively American 60, 174, 175 

Direct Exporting, Making a Start in 60-64 

Drafts with Interest Clause 106 

Drafts, How to Draw Foreign 106 

Dumping Products Abroad 184, 185 

Efficiency in Production, Importance of 183 

Engineering in Foreign Markets 119, 120 

Exaggeration to be Avoided 65 

Exclusive Agency Plan, Circularizing under 90 

Exclusive Agency Plan, Salesmen under • 82, 84 

Exclusive Agents, Appointment of 49, 50, 61, 62 

Exclusive Agents, Cooperation with 50, 89, 90 



INDEX 201 

EAGE 

Exclusive Agents Defined . ..- 48 

Exclusive Agents for Heavy Machinery 119, 120 

Exclusive Agents in Foreign Trade 46, 48-51 

Exclusive Agents, Negotiations with 50 

Exclusive Agents, When not Required 52 

Exclusive Agents, When Required 49 

Exclusive Dealers in Foreign Trade 48, 52 

Executive Ability in Foreign Trade 33 

Experience, Value of 46, 47, 76 

Export Commission Houses 22-26, 63, 67, 68, 103 

Export Commission Houses, How to Circularize . . 67 

Export Department a Development 42 

Export Department, Definition of 40 

Export Department, Separate or "Built-in" 40, 41, 42 

Export Manager, Cooperation with 37, 38, 42, 43 

Export Managers, Qualifications of 32-36 

Export Managers as Authorities 128 

Export Papers 61, 70-74 

Export Papers, How Circulated 71, 72 

Export Papers of Two Kinds 70 

Export Papers, Service Facilities of 73, 101 

Export Selling Agents 20, 24, 27-31, 122 

Export Selling Plan a Development 45 

Export Selling Plan, Formulation of 44-47 

Export Technicians 33 

Exporting Manufacturers, Characteristics of 37-39 

Factory Branches in Foreign Trade 48 

Failures in American Exporting 14, 33 

Follow-up Work in Foreign Trade 116, 117 

Foreign Banks, Limitations of 13 

Foreign Buyers, Adjustments with 34, 51 

Foreign Buyers and New Lines 62, 71 

Foreign Buyers, Characteristics of . . . 35, 43, 68, 71, 104, 107, 113, 131 

Foreign Buyers, Dishonest 108-112 

Foreign Buying Agents in the United States 23, 24, 25 

Foreign Exchange 105 

Foreign Markets, Acquaintance with 32 

Foreign Orders, Size of 53 

Foreign Trade, Broadening Effect of 41 

Foreign Trade, Making a Start in 22, 27 

Form Letters in Foreign Trade 65, 117 



202 INDEX 

PAGE 

General Merchandizing in Foreign Markets 46, 52-55, 62, 63 

General Merchandizing Plan, Cooperating with Distributors 

under 90, 91, 92, 93 

General Merchandizing Plan, Salesmen under 84, 85, 86, 87 

General Merchandizing, when Advisable 52 

General Publicity, American Preeminence in 96 

General Publicity in Foreign Markets 92, 95-100 

General Publicity through American Advertising Agents 97 

General Publicity through Local Agents 95, 96 

German Banks, Policy of 3, 4, 117, 151, 152, 191 

German Cartel System 16, 18 

German Competition 187-195 

German Deceptive Practices 7 

German Industry, Aims of 1 

German Industry, Governmentally Directed and Supported. . . 1, 8, 10 

German Trade Policy, Weaknesses of 1-9, 13, 160, 190, 191 

German Trade Policy Unworthy of Imitation 5, 12, 45 

German Trade Policy, why Admired 14 

German Violation of Confidential Relations 4 

Honesty as a Factor in Foreign Trade 36 

Ideals in Foreign Trade 36, 45 

Imitation of American Products 136, 137 

Industrial Democracy 14, 38, 190 

International Trading Companies 23, 25 

Investments in Foreign Markets 156-161 

Legislation, Dangers of 135, 139, 141, 150, 181 

Machinery in Foreign Markets 103, 119-123 

Machinery on Credit, Exporting 103 

"Made in Germany" Idea 5, 133-146 

Manufacturers' Agents, Advantage and Disadvantage of 87 

Manufacturers' Agents as Local Salesmen 85, 86, 87 

Manufacturers' Agents in Foreign Markets 63 

Manufacturers, the Duty of 7 

Merchant Marine, Limitations of 13 

Merchant Marine, the American 162-168 

Metric System, Use of 77 

National Trademarks 83, 133-146 

Nationality as a Factor in Foreign Trade. . 12, 38, 83, 86, 138, 139, 140 



INDEX 203 

PAGE 

Nationalization of Foreign Trade, Unsoundness of . . . . 10-15, 60, 139 

140, 145, 171 

Packing Complaints 74 

Packing Goods for Foreign Shipment 53 

Patience as a Factor in Foreign Trade 35 

Patriotism as a Factor in Foreign Trade 83, 138, 145,^146 

Policy as a Factor in Foreign Trade. ... 28, 34, 69, 73, 114, 118, 150,~177 

Preferential Tariffs 169-172 

Preparatory Work in Foreign Markets 61, 62 

Press, Thoughtlessness of the American 130, 131 

Prestige in Home Market, Limitations of 43, 48, 61, 62 

Prices, C.I.F and C.I.F.C 58 

Prices, Determination of 56-59 

Prices, List vs. Net 56, 57 

Prices not Competitive 58, 59, 170 

Prices, Quotation of 66 

Prices, Retail, Maintenance of 59 

Prices, Revision of , 57 

Prices, why Higher Abroad 57 

Propaganda, Anti- American 129, 154 

Protective Tariff and Foreign Trade 139, 179-186 

Quality as a Sales Argument 5, 19, 40, 170, 180, 182, 183 

Raw Products, Exportation of 124-127, 182 

Reciprocity Treaties 169-172 

Sales Department, Domestic, Cooperation with 41 

Salesmanship 33, 40, 173-178, 180, 181 

Salesmen, Americans as 80, 81, 85 

Salesmen in Foreign Trade 63, 80-88 

Salesmen, Manufacturers' Agents as Local 85, 86, 87 

Salesmen, Nationality of 82, 83 

Salesmen, Training Young Foreigners as 87 

Salesmen under Exclusive Agency Plan 82, 84 

Salesmen under General Merchandizing Plan 84, 85, 86, 87 

Seasonal Demand in Foreign Trade 54 

Selling Methods, European 60, 173-178 

Service Facilities of Export Publications 73, 101 

Shipping Goods Abroad 53 

Standardized Products, Exportation of 124-127, 182 



204 INDEX 



PAGE 



Staple Products, Exportation of 124-127, 182 

Substitution 144 

Trademark Denned '. . 140, 141 

Trademark, Irish 145 

Trademark Piracy 135, 136 

Trademarks, Registrations of 98, 99 

Training for Foreign Trade 32, 33 

Translating into Foreign Languages 54, 78 

Translation of Catalogs 78 

Translation of Correspondence 114, 115 

Turnover of Foreign Merchants „.., ....... . 53, 166 

United States Foreign Commerce, How Developed. ..».».,. 11, 12, 13 
United States Government, How It Can Aid 11 

Visiting Foreign Markets - 61, 62, 68 

Webb-Pomerene Act " . 16-19, 61, 122, 126, 127 

Women in Foreign Trade ». . 32 

World War, Causes of the 1> 2 



